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Global Global Tech Strategy May 25 2001 Special Edition Valuation Global Equity Research www ubswarburg com researchweb In addition to the UBS Warburg web site our research products are available over third party systems provided or serviced by Bloomberg First Call I B E S IFIS Multex QUICK and Reuters UBS Warburg is a business group of UBS AG The Weekly Global Tech Journey Betty B Wu 1 212 713 3375 betty b wu ubsw com Pip Coburn 1 212 713 3422 pip coburn ubsw com Valuing Tech Parental Supervision Release 73 0 Faye Hou CFA 1 212 713 3887 faye hou ubsw com Qi Wang 1 212 713 3251 qi wang ubsw com Four factors we watch in tech likely to positively align by mid July Market at 33x 2002 P E The historical range for tech 20x to 44x forward estimated earnings The assumptions caveats and data behind DCF P S P E EV EBITDA and PEG Historical troughs and peaks for Comm Equip PCs Semis and Software Solvency issues survivorship and the stress test The Weekly Global Tech Journey May 25 2001 Node Two Valuation and Technology One only need think of the weather in which case the prediction even for a few days ahead is impossible Nevertheless no one doubts that we are confronted with a causal connection whose causal components are in the main known to us Occurrences in this domain are beyond the reach of exact prediction because of a variety of factors in operation not because of any lack of order in nature Albert Einstein 31 UBS Warburg LLC The Weekly Global Tech Journey May 25 2001 that 96 of priceline com s value at that time was derived from cash generated in years eight and out So if you get a data point that suggests there is 25 growth versus 20 growth it s a big deal How is tech the same Hmmm We go under the presumption that the value of any company tech or non tech can be found by discounting its future cash flows We were raised on or perhaps warped by discounted cash flow methodology We believe all eventually winds up there But that doesn t make the applicability to tech any

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