To: Paul Senior who wrote (4855 ) 8/29/1998 12:08:00 AM From: James Clarke Read Replies (3) | Respond to
Mike, Y2K is a very real liability. If you know its there, you might as well subtract that cost (the whole cost, including loss of customer goodwill if things blow up) from the valuation. When major airline A told me Y2K is going to cost $250 million, and a week later major airline B told me it will cost $30 million, I sold B immediately. But it is so hard to calculate. The best way I have found is to call competitors and ask what they're doing. Consider the most conservative estimate (i.e. the highest) the most realistic, and also assume that that number is too low. And don't assume its discounted in prices. It is not in my opinion. I read Wall Street analysts all the time and live in the world of insitutional investors, and believe me, everybody is talking about it but nobody knows what to do with it, so they just ignore it (kind of like stock option dilution - another future liability which is not difficult to quantify - and don't assume a bear market will solve that one, many companies are already feeling out investors about repricing their options. Directors who do that should be shot in my opinion.)
