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To: Keith Hankin who wrote (21939)	12/5/1998 6:52:00 AM
From: Reginald Middleton	Read Replies (1) \| Respond to of 24154

Keith, you are talking out of your expertise. Internet and software companies are not valued at revenue multiples. To do that would leave the acquirer or investor with no method of ascertaining risk or reward, just straight line sales growth. Valuation entails the quantication of risk adjusted reward (how much money can I make given the amount of risk I am taking). Revenue multiples, earnings multiples, etc. fail to convey this which is why your local invesmtent banker never pitches a deal to his internal private eqity group based solely on earnings or revenue multiples. I can easily grow my revenues faster than everybody else and still desttroy shareholder value. <Software companies nd Internet companies are evaluated with much higher price-to-sales ratios because they typically have higher annual growth rates, lower costs, and, at least theoretically, better long-term potential.> So why does Dell have better margins and higher annual growth rates than some Internet companies? The formula is much more complicated than you are portraying it. I have explained the multiple dilemma here rcmfinancial.com I do hope you take the time to read it with an open mind in lieu of trying to argue the point for the sake of argument. BTW, the market has not bought into anything that it hasn't bought into for the last ten years.