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Back in September when Matt did his analysis, he used a structural cash flow figure of $12.1 mil. I'm assuming that he used the cash flows from Q2-2003, Q3-2003, Q4-2003 and Q1-2004 to get to this figure. By the way, Q1-2004 was not a very good qtr for CNS in terms of free cash flow. Since then, we've gotten the cash flow figures for Q2-2004, and they were not great either. Today, a valuation based on free cash flow for the last four qtrs would show that the CNS is significantly more expensive now than back in September. However; in the January issue, Tom claims "cash flow north of 14 million" and growth rates of 13% per annum. No mention of the free cash flow situation. What's up with that? Anything close to 14 million is probably unlikely in fiscal 2004. And who knows in 2005.
I guess, more than the 14 mill figure, what concerns me is the variability in the free cash flow numbers for the last few qtrs. Particularly, if the valuation is based on free cash flow, it is hard to value the company when free cash flow varies so much. I think, this is due to the wide variation in accounts receivable. To the extent that I can apply the flowie here (careful, it's a small cap!!), I can see that it has changed from about 2.17 down to 1.23 and back up again to 1.95, roughly. This seems to indicate that CNS has difficulty managing their cash.

Anybody has any comments on this?

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