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

To: Dr. J who wrote (1581)	4/29/1998 9:29:00 PM
From: Paul Loucks	Read Replies (1) \| Respond to of 2018

Your present value calculation is flawed. You are assuming that the company can generate 6% return indefinitely and thereby protect your principal. The point is that the cash flow generation of connectivity product will only last another five years. At that point in time, there will be no principal (products) to generate the cash flow. So, yes, you got your 6% for the five years but you lost your entire principal. Point #2 is determining the value of the company right now (owners equity + highly likely connectivity future profitability + Andyne value). Andrew, point #2 was the most important of them all. If you were to buy the entire company tomorrow for $525M, what would you own and what could you expected to get back over the next X years. Put the cash in your pocket, milk the profits (cash) from the connectivity tools and spin Andyne off as a separate company. Your point about return on the cash is not valid. We are determining the value of the company as of today. Paul

To: Dr. J who wrote (1581)	4/29/1998 9:29:00 PM
From: andrew	Read Replies (1) \| Respond to of 2018

How do you know there was a big drop off in connectivity revenue? Was such a breakdown of revenues given? The question of revenue breakdown came up at the S/H meeting and while they were prepared to give a breakdown on the connectivity side, they would not give the overall BI vs connectivity revenue ratio.

To: Dr. J who wrote (1581)	4/29/1998 11:45:00 PM
From: Hassan Lakhani	Respond to of 2018

I think Paul's use of cash flow is OK if he is assuming that there will not be any cash flow after five years time. I think this is what he was assuming. Also, no one mentioned the fact that those future cash flows should be discounted. Obviously having $20 million dollars five years from now is not worth the same as having $20 million dollars today. Since we are valuing the company today, we should take the value of those cash flows in today's dollars. This will work out to be less than $150 million. For the record, I also sold my stake in HUM. The sudden drop in revenue growth eliminated my confidence in the future of HUM's share price. When a company is growing at 30-40 per cent per year, you can call it undervalued when it's PE Ratio is 15-20. But, when growth falls to 15 per cent, and the company seems to be pinning all its future hopes on a business it only really got involved in a few months ago, I don't think HUM is so undervalued with a PE of 15-20. Just my two cents. Good luck to all those still in HUM. Hassan