Previewing Macrovision's (NASDAQ:MVSN) Q3 earnings report on Tuesday, I mused that with the firm selling for just 16 times trailing free cash flow, $24 and change was "not at all a bad price" to pay for the stock. Two days and an 8% hike in market cap later, perhaps I should be longing for the days when these shares were selling for $24 a stub -- but I'm not. Here's why:

The good news
Sales rocketed 32% in the third quarter, and GAAP profits per share nearly doubled, with performance far exceeding analysts' predictions on both counts. However, I didn't base my valuation on GAAP earnings -- partly because the company itself deemphasizes GAAP accounting. (Case in point: Its Q4 guidance predicts $80 million to $85 million in sales, but $0.47 to $0.52 per share in pro forma profits.) Instead, I valued the company based on its free cash flow.

And now the bad
Macrovision included a cash flow statement in the Form 10-Q filed one day after earnings. Therein, we learn that the company was showing its "good side" in emphasizing GAAP profits growth this quarter, because the growth in cash profits wasn't particularly impressive. So far this year, free cash flow is up a mere 4% in comparison to the cash profits generated in the first three quarters of 2006 -- nothing like the 36% rise in net income, or the 32% increase in profits per share (less than net income because the share count increased 3%).

Annualized, the company's free cash flow looks on track for $69 million by year's end -- a whole lot less than the $82 million I was guesstimating just three days ago. So what we have now is not a 16-times-price-to-free cash flow stock growing at 16%, but a 21-times-price-to-FCF stock that will hopefully grow at 16% (but is currently stuck at just 4%). Not quite as impressive when you look at it that way, eh?

And finally, the other news
As for Tuesday's other big news, the purchase of "entertainment descriptive content and content management" company All Media Guide Holdings (AMG) certainly looks like a complementary business. It should bring Macrovision recurring, high-margin revenue clients. One client, (NASDAQ:ANSW), identifies itself as such. And AMG describes itself as licensing content to "leading consumer electronics manufacturers, retailers, and Internet sites," suggesting the well-heeled likes of Apple (NASDAQ:AAPL), Best Buy (NYSE:BBY), or (NASDAQ:AMZN).

But for now, we don't know how much revenue, and how much profit, Macrovision is buying for its $82 million -- making it tough to say whether the purchase price is fair.

For further Foolish musings on Macrovision, read:

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Fool contributor Rich Smith does not own shares of any company named above. Disclosure is always in fashion at The Motley Fool.