Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Source Media SRCM -- Ignore unavailable to you. Want to Upgrade?

To: Pluvia who wrote (2513)	5/18/1999 12:58:00 AM
From: art slott	Read Replies (1) \| Respond to of 3015

Well it begins with an A but it's definetly not AOL.

To: Pluvia who wrote (2513)	5/18/1999 11:43:00 AM
From: Q.	Read Replies (1) \| Respond to of 3015

Market cap $262 M, enterprise value $380 M These are huge numbers. The market cap is $262 M. Long term debt + preferred stock is $118 M. Adding them together gives an enterprise value of a whopping $380 M. If warrants are exercised, this enterprise value will soar even higher. Is there anybody who thinks this company's prospects and technology are really worth $380 M? BTW, R&D is $830 k in the latest quarter. Tiny. In the 5 years from 1994 - 1998, total R&D expenditures were $19.9 M. That works out to $4 M per year. Now look at the enterprise value. It is equivalent to a humongous 95 years of R&D expenditures. Anybody buying the stock based on the idea that the technology is valuable, should ask themselves if it is worth 95 X the annual R&D expenditures. That multiple is very, very high for a technology company. Let's look at this another way: Michael Murphy, the editor of that technology newsletter, has his own multiple for evaluating development-stage R&D companies. He takes the last 5 years of R&D, and divides that into the market cap (or in this case, the enterprise value). SRCM is trading at a multiple of 20X 5-year-R&D expenditures, which is very high compared to other development-stage-companies. It might take a while for this stock to find its true value. Maybe there won't even be a catalyst until they have to start making payments on the LT debt.