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Technology Stocks : (LVLT) - Level 3 Communications -- Ignore unavailable to you. Want to Upgrade?

To: MangoBoy who wrote (516)	3/24/1998 4:53:00 PM
From: Robert Dwyer	Read Replies (1) \| Respond to of 3873

Mark, You are right and this is the discussion that I think could be worthwhile for the group. The real question is : How do you value a company like KIWT. How do you decide what is a fair value?. It has been pointed out by many that the current market cap (#of shares x price) is over $10 billion with the stock at $70. With some $5billion in assets and $10 billion in buildout costs, how to we determine what a fair value is to pay? I would like to hear from some analytically inclined contributors... My thinking is that rather than apply a multiple to book or asset values, why not use a discounted earnings model. It is often used in the biotech field and might be appropriate here. The theory is that a completely built out network would garner some amount of market share thus producing revenue and ultimately profits. We take the future EPS, apply a market multiple and discount that price back applying a rate of return that we would want to assume the risk. Depending upon how far along the curve a start-up is, you require a greater or lesser rate of return. (this is basic venture capital stuff as well). So, the starting point is what can KIWT earn in a built out state? How long will it take? How much revenue can a state of the art IP network produce What kind of margins? What kind of eps? I don't have the answers just the questions. I'm sure that KIWT management has gone through this exercise in some fashion and I would appreciate any input or comments.