zhuwx@em.tsinghua.edu.cn IPO

;;

IPO(No Assets, No Revenues)(SinaSohu): No Profits IntelMicrosoftCoca-cola: No Operating Free Cash Flows

IPO(I), ,, ()

1. P/E()P/S/MV/BV/P/CF/P/EBITDAEV/EBITDA P/2P/Page ViewP/Customers

Adobe Systems

23.2

Autodesk

20.4

Broderbund

32.8

Computer Associates

18.0

Lotus Development

24.1

Microsoft

27.4

Oracle

37.8

Software Publishing

10.6

System Software

15.7

24.0

System PublishingSystem Software 27

BroderbundOracle 21

______________________________________________

P/E

EV/EBITDA

/

/

/

IPO(II)-1. Williamson(1937) 2.Miller(1961) : (1) (2) (3) (APV)

FCFt PVCFt tr-

PV()

HHorizon Time, PVHHorizon Value.

FCFFEBIT1

(EV)=(EV)

4

331.96165185

317.0807945

271.64589

162.205335

19991998199819971997

301.029266213.204319251.9473217265174.5114871235163.1799636161.675715

-1148.56065-127.721019-538.927005143.615091-457.254111-364.7617264

0

0

0

0

0

0

19991998199819971997

431.91133311462.16959315611.42607941562.63262128931.3588385

-1623.527867-2635.5562652003.387604-3160.352113-1466.836338

1623.5278672635.556265-2003.3876043160.3521131466.836338

537.692226431.91133311462.16959315611.42607941562.63262128931.3588385

418.821379-1623.527867-2635.5562652003.387604-3160.352113-1466.836338

0

0

0

0

0

0

19991998199819971997

33.96734.3140544.1664550.371554.44225

485.002267.878-70.639273.068122.747

-451.035-233.56395114.80545-222.6965-68.30475

47.239294533.96734.3140544.1664550.371554.44225

-1201.60375-485.002-267.87870.639-558.068162.253

47.2392945

33.967

34.31405

44.16645

50.3715

54.44225

19991998199819971997

75.9601958.33914539.37150543.30381521.69825

changes

184.5455221.359977.30284.406331.0755

36.5062230.66145.8369.9078.3

148.0393-9.301131.46674.499322.7755

128.428113.89949.63419.45435.044

6.52158.80514.84831.5454.037

111.9964175.9601958.33914539.37150543.30381521.69825

-670.18211-282.9883-163.4029-95.948-125.498-361.8565

-207.02811-105.063755-56.576495-82.194185-340.15825

111.9964175.9601958.33914539.37150543.30381521.69825

-670.18211-282.9883-163.4029-95.948-125.498-361.8565

0

0

0

0

0

0

-337.01223-324.70862599.629563-1402.233948

331.96165185317.0807945271.64589162.205335

0

0

0

0

199919991998199819971997

57.248553.9465542.074935.0715124.87459

19991998199819971997

changes

75.91765.605277.03585.65336.374

-33.51456.1113.15713.2893.25

109.4319.495263.87872.36433.124

28.635.9625.033.90351.8565

2.99121.84-2.0043.006717.7333

31.59157.823.0266.910219.5898

141.02267.295286.90464.274257.7138

-109.431-9.495-263.878-57.364-38.124

64.98327557.248553.9465542.074935.0715124.87459

-530.6691-141.022-67.295-286.904-79.2742-52.7138

64.983275

57.2485

53.94655

42.0749

35.07151

24.87459

199919981998199719971996

193.687137.329975138.418825104.0062

changes

-42.15571.6465.18-18.12

78.45-35.653.95241.67

-120.6607.2961.2378.29

103.81175.126384.314-16.327252

1.41-0.22-0.5822.68

105.22174.906383.734935.57

-15.38782.2147.91282261.140328

209.067-644.870025-9.493995-157.134128

218.7018193.687137.329975138.418825104.0062

-176.2063815.38-782.196-444.964-1013.86

0

0

0

0

0

(FCFE)

FCFE+- - +

PV()

1H

2PVHg ? PVHFCFH1 /(rg)

PVHFCFH /r

()PVH

1 2 3 4 5 6 7 8 9 10 10 12 14.4 17.28 20.74 23.43 26.47 28.05 29.73 31.51 1.2 1.44 1.73 2.07 2.49 2.81 3.18 3.36 3.57 3.78 2 2.4 2.88 3.46 2.69 3.04 1.59 1.68 1.78 1.89 -0.8 -0.96 -1.15 -1.39 -0.2 -0.23 1.59 1.68 1.79 1.89 () 20 20 20 20 20 13 13 6 6

1. 16 2. 14205613 612 3.

-0.8 -0.96 -1.15 -1.39 -0.20 -0.23 PV= 1.1 1.12 1.13 1.14 1.15 1.16 =$ 3.6 ()

PVH=6= 1 1.59 (1.1)6 (10%6%) = $22.4 ()

APVPV16PVH6 3.622.4 $18.8()

119

8,A8. PVH=8 1 9 (1+10%)8 10% 16.7 PVA$2.0 + $16.7$14.7() 113.6 818.826.3

Build-up

CAPM

-Fama-French

/

APM

DCF

CAPM

rerf (rmrf)rermrf

%

%

71

1926-1996

12.7

7.5

70

1927-1996

12.7

7.5

60

1937-1996

12.6

7.1

50

1947-1996

13.8

7.6

40

1957-1996

12.4

5.3

30

1967-1996

13.0

4.9

20

1977-1996

15.3

6.4

15

1982-1996

17.4

8.6

10

1987-1996

16.0

8.3

5

1992-1996

15.9

8.9

E(Ri)i Rf RPm RPs Rpu

Fama-French CAPME(Ri)i RfisihiiRPmSMB,HML,

DCFDCF

DCF-=f(X1, X2, X3, X4)X1Firm-level price drivers (Base case DCF value + Growth option investors expected premiums )X2Industrial-level driversX3 Marco drivers (economic & politics),X4Market noise(market behavior))

DCFDCFDCF

P/RP/CustomersP/E, P/CF

Start-up P/R Subscriber growth Per-user statisticReal Option P/R DCF Price/EBITDA Per-user statisticReal Option P/R DCF Price/EBITDA EV/Sale EV/EBITDA P/E Long term DCF EV/EBIT SALE/EBIT Dividend yieldIPO

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