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Technology Stocks : Hummingbird Comm. (HUMC) -- Ignore unavailable to you. Want to Upgrade?

To: Paul Loucks who wrote (1578)	4/29/1998 3:48:00 PM
From: andrew	Respond to of 2018

Paul, While I agree with you on points 1) & 4), I'm not sure I understand your argument in point 2). Are you implying that the owners equity & the future cash flow will not generate a compounded R.O.E. over the next 5 years (and further into the future). I think you should be looking at the connectivity business as providing the seeds of growth into other areas. Thanks very much for your past conributions and good luck.

To: Paul Loucks who wrote (1578)	4/29/1998 6:17:00 PM
From: fellowfool	Respond to of 2018

Thank-you for explaining your actions and position. You seem very knowledgeable and I appreciate being able to learn from your post. I just recently acquired my HUM shares after watching the company for several years and holding back-the uncertainty of software. I will likely hold (again) for now and hope for the best. Perhaps there is an explanation for some of the discrepancies you found. Or perhaps you have discovered the reasoning of the shorts. This is the sort of company that can surprise (on the upside).

To: Paul Loucks who wrote (1578)	4/29/1998 8:58:00 PM
From: Dr. J	Read Replies (3) \| Respond to of 2018

I also am confused by point 2). You can't just add up cash flows over 5 years to get a valuation. Instead, you have to look at what present value investment would generate those cash flows at an appropriate discount rate. If one used 6% (risk-free T-bonds) you would get approximately $30M/0.06 = $500M which about equals the market cap. Of course, you can't use a risk-free return (because why would you be in a stock if you could get the same rate in T-bonds?), and you can't add the cash flow valuation to the rest of the calculation. That all said, my FCF valuation suggested a price of about US$40/share . However, I was really spooked by the fall off in the connectivity business; the data warehousing piece is not going to grow nearly fast enough to make up for that. Software companies like this going through major busines transitions typically have flattish revenue and decreasing earnings for several quarters or years until starting to grow again. I'm on the sidelines for now.

To: Paul Loucks who wrote (1578)	4/30/1998 12:15:00 AM
From: Martin Goldenberg	Respond to of 2018

Paul, I respect your analysis and you gave it considerable thought. I have trouble identifying with your analysis of company worth against fair share market value. Let's say HUM had not purchased Andyne and connectivity sales continued to represent 12 to 20 percent profit growth, as the jury is still out on the rate of decline on connectivity profit growth. I'd say that the share price would be worth, in fact, at least what it is today. Now that they have taken the bold step of of expanding into the lucrative BI data warehouse business, their potential for profit growth can grow significantly. The issue is, in my mind, whether HUM can continue the strong drive and careful management needed to quickly ramp up in this new business venture. The additional key here, is their plan and determination to spend another $150M to $300M on further and much larger acquisitions to make this happen. So I am more appropriately going to focus on their continued revenue growth and look for reasonable associated profit increases as my prime basis for judgement.....and yes of course......associated expenses that go along with expansion and consolidation. I can not blame you for losing patience. I am sure that one of the disappointments is the rather late aggressive action on the business acquisition front. It should have started about 6 months earlier. But then again sound business judgement and strategy development takes time. So being realistic I have decided to expect realistic results. I will wait and assess their progress for at least another 2 quarters. Hope to be hearing from you again so that you can keep us continuing bulls sober. Martin