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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year -- Ignore unavailable to you. Want to Upgrade?

To: JJ who wrote (1717)	7/31/1998 11:32:00 AM
From: Just_Observing	Read Replies (2) \| Respond to of 4509

PSFT's valuation relative to SAP's based on Revenues SAP will start trading in NY on monday. Today the stock is up to 1315 DM. SAP has 105 million shares. Converting into market cap, with a conversion rate of 1.8 DM to the dollar (since it fluctuates around 1.8 though today it's 1.77), the market cap of SAP works out to be about 76.7 billion. PSFT's revenues last quarter were 320.5 million versus 1200 million for SAP. But our friends in Germany do not have the deferred revenue concept. The WSJ today mentions that SAP will have to reduce next years revenues by 5 to 6% to conform to US accounting standards. So if we include deferred revenue, PSFT's revenues last quarter were 320.5 + 37.5 = 358 million. PSFT's revenues are about 30% of SAP and PSFT's revenues are growing faster. So based on SAP's current valuation, PSFT's stock price works out to be an even 100. Even if we neglect deferred revenue, PSFT's price still works out to be 90. Please remember that we are not assigning a premium for PSFT's higher growth rate or for SAP's larger customer base. Either PSFT is a steal or SAP is way overpriced or both.