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Biotech / Medical : SANGUINE CORP. (SGNC) -- Ignore unavailable to you. Want to Upgrade?

To: dwlima who wrote (2494)	7/3/1998 4:41:00 PM
From: wonk	Read Replies (1) \| Respond to of 5402

dwlima: it is incorrect to discount future earnings... earnings does NOT equal cash. this would be a grave mistake in my professional opinion to perform a valuation in this manner Discounted future earnings (DCE) and discounted cash flow (DCF) are two separate valuation techniques falling under discounted future returns (DFR); both valid. Professional experience helps one to choose which one is appropriate in a particular situation. The discounted future returns (DFR) approach to valuation is most often used in the context of mergers and acquisitions. However, as discussed in Chapter 2, it is the theorectically most correct approach to valuation and serves a wide variety of valuation purposes... Valuing a Business: The Analysis and Appraisal of Closely Held Companies. Shannon Pratt. Second Edition. Pg 68. Using DFE in this situation can simplify a complex problem. It is perfectly valid and, quite frankly, I am surprised you have never come across it. ww

To: dwlima who wrote (2494)	7/3/1998 5:23:00 PM
From: General J	Read Replies (2) \| Respond to of 5402

The FACTS ARE FACTS,REGRETS ARE REGRETS,BATTLES ARE BATTLES..... When you go into a confrontation or battle you don't engage the enemy with outdated equipment, with no forward observers and no supply lines to back you up.....You make sure your equipment is HI TECH ,You have plenty of forward observers and your supply lines can't be cut off. Its called CYA, SHORT FOR cover your a--. SGNC-----Is there a short building up???? Yes there is.......Do we care????????How do you know??? With updated advanced comp.tech. the sharehoLder list is updated on a daily basis from the TRANSFER AGENT...2PLUS 2 EQUALS 4 IN MY BOOK....Total shares minus outstanding shares equals total short....... REGRETS--not positioning in a stock when someone will short the shares to you, when there is only a few people that know about it's potential. When everyone finds out about it, it is usually too late....The shorters are even trying to buy them. Am I hyping the stock???? No,FACTS ARE FACTS, REGRETS ARE REGRETS, AND BATTLES ARE BATTLES. GENERAL J (Going over the list of forward observers)

To: dwlima who wrote (2494)	7/4/1998 9:07:00 AM
From: jmt	Respond to of 5402

In addition to wireless comments.. Depreciation is not really a noncash item. It is a smoothed way of projecting future capital expenditures which are part of a FCF forecast. If the analyst has a specific understanding of the Capital expenses required going forward, they should be used. If working in a vacuum, historical depreciation is as good a predictor as anything. The other non-cash items such as amortization of goodwill are more of a problem. Another valid model (given its weakness in certain circumstances) is the DDM, or dividend discount model, where earnings can be used as a proxy for dividends. What is interesting about this model is through a mathematical derivation one can calculate a Price Earnings multiple, which is another form of valuation using earnings. jmt

To: dwlima who wrote (2494)	7/4/1998 12:58:00 PM
From: Mr. Forthright	Read Replies (1) \| Respond to of 5402

<<i have never seen a valuation that discounts future earnings.>> I am disappointed to find out that you have never read a research report done by a major US brokerage firm on a major biotech company. Or is it that you disagree with how THEY value biotech stocks?

To: dwlima who wrote (2494)	7/4/1998 1:25:00 PM
From: Mr. Forthright	Read Replies (1) \| Respond to of 5402

The first eight questions for the valuation model were: 1) What is the total market potential for synthetic red blood cell products? 2) What kind of market share/penetration is SGNC expected to achieve? 3) When is SGNC's product expected to get to market? 4) How many shares will be outstanding the year the product hits markets and in each of the following 5 years? 5) What is the expected growth rate for the 5 year period following the introduction of the product into the market? 6) What will SGNC net earnings after-tax (per share) be for those years. (Take into account the expenses, R&D costs and the fact that, if the product gets to market, the company is likely to earn a royalty on the sale of the product). In other words multiplying the answer to question 1 by the answer to question 2 does not equal the answer to question 6. 7) What P/E ratio would be appropriate to use for those years? 8) What discount rate would be appropriate to use to obtain a net present value? The next question is: 9) Why haven't you guys figured out a value for SGNC now that you have the model? Should I explain how it works?