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Strategies & Market Trends : Trader J's Inner Circle -- Ignore unavailable to you. Want to Upgrade?

To: Wes Stevens who wrote (4678)	1/15/1999 10:06:00 PM
From: dennyv	Read Replies (2) \| Respond to of 56535

Wes: NAVR IPO Valuation I haven't seen any contradiction so far so you must be on track with your assessment. So, I start to see what TJ means when he says that there are a lot of if's here. Scanning the YAHOO news items all the way back to 6/30/97 there is nothing I can find about NetRadio being IPO'd. How can we be sure that it is even going to happen? Is there any mention in any of the news services?

To: Wes Stevens who wrote (4678)	1/15/1999 10:11:00 PM
From: Trader J	Read Replies (1) \| Respond to of 56535

Wes - Hard to argue with those number. Just hope the market uses the same calculation. However..... the big problem with these equations it that they are figured on the current value of the IPOd issue. And as everyone knows, the true value of a NetRadio IPO is not necessarily what it is going to trade at....nor even close. But this is why valuation of the Inet issues is so difficult, because few of them have any real earnings from which standard methods can be applied. Nor do they have a real history that suggests where they are going. Nor do they have a proven technology with a forseeable, and realistic future. For those reasons is why I keep mentioning that the most dangerous thing that can happen is, perhaps, some of these Inets to turn profitable and thus, become measurable to prove how truly over valued they are. These assessments will move, and scare, people. Good job Wes. TJ

To: Wes Stevens who wrote (4678)	1/16/1999 4:30:00 PM
From: M. Scott Gegenheimer	Read Replies (2) \| Respond to of 56535

Hi Wes, Good valuation on NAVR/IPO. Couple of comments (assuming of the same assumptions that you did). First, If the company spins of 3.5 million shares NAVR get that cash. i.e., if the initial offering is at $15 per share than NAVR get 3.5 X $15 = $52.5M in cash less 5 to 7% for the underwriters. This assumes that the shares offered are all primary and not secondary shares. Second, there is a current value in NAVR's stock related to the part of the company that is being IPO off. Although the value is assumed to be undervalued and that's the reason why mgmt wants to spin of those assets. This pre-IPO value needs to be deducted from the valuation. How much of the sales, revenue and earnings of NAVR are related to assets that are being IPOed? Third, The 5 million shares that NAVR will still hold after the IPO needs to be discounted to realize their true value. If the stock actually goes to $100/share, NAVR will probably not realize the full value of $100 X 5 million shares because to fully realize their value they would have to sell them (technically you don't have to sell them to realized their value, hence the discounted value). If they did another stock offer for their remaining 5 million shares what would happen to the stock price? Probably drop. Many could argue this fact and say that on paper the value is really $100 X 5 million, but I wouldn't agree. Although who knows, internet stock have very high valuations and who knows what the valuation will be next day,week or month??? Don't get me wrong I like NAVR, unfortunately we haven't seen the prospectus yet and there are a lot of unknowns. Also Inets are not valued like typically companies. If these Inets start earning money it could cause problems in their valuations. Lets hope that doesn't happen. Full disclosure: I bought NAVR about a month ago at $9 11/16 and sold on Friday at $18. I will be buying back into this stock on any pull backs hopefully at $15 or $16. I believe this stock could see $25 to $30 after the announcement and I will probably sell the day of the announcement assuming there is a pop. Regards,Scott. p.s. Works be crazy that last two weeks and have not had the time to review AFCI for everyone. After getting caught up on all the new postings I will try and post my DD of AFCI on Sunday.