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To: Quad Sevens who wrote (12592)	3/16/1998 7:51:00 AM
From: Mr Logic	Read Replies (1) \| Respond to of 31646

Re Valuation, P/E etc. I think we are all in broad agreement. Perhaps the best way to approach it is to consider the 'bottom line' y2k revenues as one part of the valuation. The second part is then based on the effect on the future growth of the company of that injection of free cashflows. That really comes down to management's ability to execute a plan over at least 5 years, and make the most of the leg-up the company gets from that cash. Obviously the exposure to additional customers and the experience gained during the y2k work also count. It if probably best to forget p/e thinking over the next 5 years. After all p/e is only a very crude ratio attempting to summarise a large amount of information with a single number. Better to make absolute predictions of the revenues and expenses for the next 5 years, then use a p/e ratio at that point based on predicted growth. Using absolute numbers short term also has the benefit of being able to better estimate the effect of the windfall. For example, if y2k revenues generate $10m free cash in 1999, what exactly will the company do with the funds? Hire and train? Write new systems? Marketing? etc.. Most people on this board seem happy that there will be y2k revenues, and that the company will emerge much stronger post 2000. But IMO it is meaningless to use these as justification for an increase in stock price without at least some estimates of actual numbers. Otherwise how do you know that these effects are not already accounted for in the stock price? Or, does the stock price has even more potential appreciation than first thought? Thanks for participating in the discussion everyone!