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Strategies & Market Trends : Bill Wexler's Profits of DOOM -- Ignore unavailable to you. Want to Upgrade?

To: Peter V who wrote (3216)	10/1/1998 6:58:00 PM
From: Shtirlitz	Respond to of 4634

I am planning to cover in teens, however even on these levels the company will be way overvalued. Their growth will be dramaticaly slowed down due to the currency problems. The only thing that helps them now is a lot of cash on hand. However valuation ratios are huge, even considering cash. Here is a piece from their 10-Q "Substantially all of the Company's operations are in foreign countries and therefore the Company's consolidated financial results are subject to fluctuations in currency exchange rates. The Company's consolidated operations transact their business in the following significant currencies: Russian Ruble, Hungarian Florint, Belgium Franc and the European Currency Equivalent. For those operating companies that transact their business in currencies that are not readily convertible, the Company attempts to minimize its exposure by indexing its invoices and collections to the applicable dollar/foreign currency exchange rate to the extent its costs (including interest expense, capital expenditures and equity) are incurred in U.S. dollars. Although the Company is attempting to match revenues, costs, borrowing and repayments in terms of their respective currencies, the Company may experience economic loss and a negative impact on earnings with respect to holdings solely as a result of foreign currency exchange rate fluctuations, which include foreign currency devaluations against the U.S. dollar. Furthermore, certain of the Company's operations have notes payable and notes receivable which are denominated in a currency other than their own functional currency or loans linked to the U.S. dollar. The Company may also experience economic loss and a negative impact on earnings related to these monetary assets and liabilities. " Since they get almost all of their revenues from Russia, the next quarter must look really ugly after Russia's rouble devaluation. And the general situation in world won't really help with the exchange rates on other questionable currencies they use.