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To: Michael Burry who wrote (7204)	5/18/1999 7:49:00 PM
From: Shane M	Respond to of 78476

Michael *sortof off topic I guess* I'm a big GG fan, but I don't see that holding AAPL runs contrary to GG principles. AAPL still holds an impressive position in niche markets such as graphic design, desktop publishing, etc. It will likely be difficult to unseat in those areas, and will provide them with a base from which to launch an assault on other areas of computing. AAPL also controls its standards (proprietary hardware and OS) more fully than the PC world in general. This allows them to offer greater simplicity and compatability (anyone who's added a peripherial(sp?) to a windows systems likely knows the fear of compatibility issues). The simplicity is a big plus as computers penetrate the market to a greater degree - with many of these customers wanting primarily 1) easy internet access for browsing and 2) e-mail. The internet is the killer app, and Apple still benefits from its reputation of being easier to use. Design control has its advantages. Shane.

To: Michael Burry who wrote (7204)	5/18/1999 9:25:00 PM
From: Daniel Chisholm	Respond to of 78476

Re: EVA ... I am bothered ... by ... estimating a cost of equity using EM-based CAPM, and the debt issue I've never formally studied EVA, though I have run across it in a number of places. So if I appear to grossly misunderstand what EVA is all about, you now know why ;-) It (EVA) initially appealed to me, though after reflection it seems to come up short of being something truly earthshaking. My take on it is that it attempts to perform some sort of rational analysis of a business' returns, making adjustments to regular GAAP measures in the process. The basic idea of having a rational approach, and using an understanding of what's really going on inside a real live business (and adjusting your interpretation of GAAP figures accordingly), is the central inspirational point that I have gleaned from each of Graham and Buffett. The thing about EVA that stuck in my craw was that it sets a "required return on equity", and then determines whether the company earns its cost of equity capital, falls short, or exceeds it. I guessed that EVA's methodology of computing "required ROE" was something like Mike described (based on market conditions, risk free rate, volatility, debt-equity ratio, etc, etc). Instead of doing this, my approach would be simply to use the EVA-type analysis to determine the total return on equity. A separate methodology or judgement process would then decide, given the nature of the business, its capital structure, the risk free rate, etc, whether or not such a level of return was acceptable. Intangible aspects, such as certainty of earnings, durability of earnings, barriers to entry, growth opportunities (typical Buffett stuff) should of course be incorporated into the more sophisticated analyses of whether or not a given ROE represents the company "earning a proper return on equity capital invested". - Daniel