RE: Deal models

Thanks for the note -- that helps to put it into perspective.
Unfortunately, since Sally is out this week, I had not seen this note.

James has all of the marginal cost information, which can be used to work
from - I still believe that the approach we discussed in our meeting before
lunch today is the right one. We need to create some customer profiles which
include the number of transactions at each level and for each of the
potential services to calculate some potential cost base scenarios --- from
which we can gross up to a potential revenue number.

Rahil -- I would like to discuss the next steps, and who we put on point
(specifically) for each task.

Beth

-----Original Message-----
From: Eichmann, Marc
Sent: Friday, March 16, 2001 12:19 PM
To: Apollo, Beth
Cc: Jafry, Rahil; Scribner, James
Subject: FW: Deal models

Here is the message I received from Greg, which I just told you and Rahil
about today.

I would really like to use Rahil's expertise at EOL to try to size the
potential market going forward. On the other side, I would appreciate getting
feedback about the marginal per transaction cost at different volume levels
as presented in the document we discussed this morning. I will be available
to help in any way needed.

Thanks in advance for your help

Marc

-----Original Message-----
From: Piper, Greg
Sent: Thursday, March 15, 2001 2:59 PM
To: Eichmann, Marc
Cc: Zipper, Andy; Gros, Thomas D.; Beck, Sally; Raghavan, Suresh; Bartlett,
Jeff; Shelby, Rex
Subject: Deal models

We need to finalize the 4 models that have a high, low and expected case for
our businesses. They are CommodityLogic, DealBench, TransactionHub and
Mid/Back Office. DealBench should be built as an ASP as discussed,
CommodityLogic as an ASP, TransactionHub as we have discussed and back office
as you are working with Sally.

We first need to agree on all the assumptions for revenue that lead to each
case suggested above for each business. We then need to agree on 5 to 10
years of expenses so we can reach an operating margin we agree upon. We then
finally need to look at them and see what capital investment might be needed
to go in to each one and then finally build a pretax income statement and
pretax cash flow statement for each business.

The goal is to determine, within a range, the present value of each business,
based on certain assumptions, and then to determine what they are worth as a
company.

I know we are part way there on all of these initiatives, but I want this all
finished as follows:

TransactionHub - Friday afternoon the 16th.

CommodityLogic - Tuesday afternoon the 19th

DealBench - Wednesday afternoon the 17th

Mid/Back Office - Friday the 23rd

Remember, we are trying to get a range that is approximately right that we
can all believe.

Your thoughts?

GP