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Technology Stocks : TAVA Technologies (TAVA-NASDAQ) -- Ignore unavailable to you. Want to Upgrade?

To: Larry Williams who wrote (27913)	2/11/1999 6:20:00 PM
From: Karl Drobnic	Respond to of 31646

Larry: Latest earnings & Tava's price. For the 6 months, TAVA's EBIDTA is $12.2 million. Q2 EBIDTA is about 40% more than Q1 EBIDTA. This is right on track with my earlier calculations, so predictability is increased. So lets be conservative and say that TAVA has EBIDTA of $23 million for the full year ending June 30, 1999. Assume that you can make a safe return of 4.5% on your money. How much cash would you have to invest at 4.5% to earn $23 million in interest? The answer is $500 million cash. Divide $500 million by 23 million shares = $21.75/share. Discount for risk and subtract a little for the rounded off math. Even if you discount TAVA to the status of a junk bond paying 10%, (and TAVA is far better than a junk bond), you get $10/share. TAVA's discount to its ability to generate cash is a major reason to buy TAVA. The price must rise to reflect TAVA's ability to generate cash. The alternative view is that TAVA will not be able to generate EBIDTA at the assumed rate. That's why we apply a discount - because TAVA is not a T-Bill. Those who believe TAVA can generate cash, and use that cash to compound profits should be prudently accumulating TAVA at these discounted prices.