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Technology Stocks : General Magic -- Ignore unavailable to you. Want to Upgrade?

To: shortlong2 who wrote (2819)	7/19/1998 12:08:00 PM
From: Sea Otter	Read Replies (7) \| Respond to of 10081

GMGC Financial Analysis I did this on the back of a napkin this morning. We now have enough info to make some swags at 1999 revenue, eps and possible Street valuation. Assume: - 400,000 subscribers end of 1999. This represents less than %1 of the target market. Given that this will be after a year of intensive Satchi advertisement, lots of free PR and tens of millions of people hearing "Hi this is Portico" when they call someone, I think this 400k number is very conservative. - Assume no issue with scaling the NOC to handle this traffic. By year's end, my understanding is that they'll be able to support >200k subscribers (two NOCs), and given that the NOCs scale easily, this again seems conservatively reasonable. - I've been told that the average subscriber uses almost 500 minutes. Let's assume that this goes down to 300 minutes by '99, again, just to be conservative. - Given the official pricing, the best pricing for 300 minutes would be the $50 rate. Everyone takes that. - Let's completely disregard any other revenue source. Specifically, zip '99 revenue from: - Agent tools (Microsoft) - WebTalk - MagicPhone - Licensing deals - Datarover - Content forwarding All revenue comes from Portico. - Assume resellers get 20% of gross revenue (I think this is extravagent, but let's go with it). Assume 3M NOC cost for each 100k subscribers (am told this was the cost for first 100k). - Totally ignore gmgc 150M tax credit. - Assume 30M shares GMGC at end of '99. Revenues: 240M total annualized revenue [400k subscribers * 50 * 12] 192M gross (after reseller) [240M - (.20 * 240)] Expenses: 9M NOC Expansion cost [(3 * 3M)] 12M NOC admin [(1 * 1M * 12)] 34M Employee loaded labor [200 employees *120k/ll] 10M G&A 10M Telephony charges 20M Mkt&Advertising 6M Content Fees 101M Total Net ~60M net [192 - 101 - .3 tax rate] EPS 2.00/share [60/30] In my mind, this gives a target price of GMGC ranging from $40 (assuming conventional blue-clip ratios) to >$100 (assuming high-tech growth ratios). Of course, these numbers may be very low, giving I purposively slanted things very conservatively in this analysis. Probably the weakest part of my model is the expense side. I'd be interested if anyone has a different take on these numbers. Also, ideas about expected revenues from the other sources I discounted. Sea Otter

To: shortlong2 who wrote (2819)	7/19/1998 2:51:00 PM
From: Seconds Out	Respond to of 10081

Shortlong2, always nice to have you on the board. You are a straight shooter. Stop by more often, we can always use the support. Take care. Seconds out.

To: shortlong2 who wrote (2819)	7/19/1998 3:38:00 PM
From: Raven McCloud	Respond to of 10081

shortlong2, thanks for the challenge!! i do appreciate your willingness to understand my orientation toward GMGC as an investment. i'm constantly stalking my approaches to GMGC and other companies; mostly, i post here and occasionally yahoo to get questions answered from more seasoned and astute investors (like yourself) AND to learn how to learn. yes, indeed, it is only a game AND as Sri Chinmoy once said: "Whoever can Soulfully and powerfully Smile the oneness-smile, Before the game, During the game, And after the game, is undoubtedly the real winner." Unfortuanately, for all or most of us, our attachment to winning only causes us to hold our breaths, tighten our jaws, tense our muscles and generally just feel contracted and stressed. Unless you have REALLY deep pockets (which i don't thus my antsiness about my larger position in GMGC) then the game becomes more serious. anyway, i'm do try to stalk the emotional side of my experience in the game. Fortunately, even with my limited investment experience, i am on the positive side. no self-importance intended with that last sentence. i'll for sure have a big "oneness-smile" when we see Portico service growing like wild-fire. BTW, my statement "ready to hit the sell button at a moment's notice." wasn't intended as a warning. it was just a statement of where i stand, that's all. and why is it you laugh that i'm, as you say, hot and cold? i see nothing wrong at this point in time with GMGC to be cautious. i'm not one to build my hopes up too high. GMGC still has a lot of proving to do, IMO. take care shortlong and may your longs always beat the shorts and your shorts always beat the longs. that's the long and short of it! raven