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Technology Stocks : Red Hat Software Inc. (Nasdq-RHAT)
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To: ynot who wrote (447)8/13/1999 8:30:00 AM
From: peter michaelson  Read Replies (1) of 1794
 
Let's hypothesize that Windows loses the war with Linux in 5 years.

Windows revenues is about $6 billion.

RHAT market share - 20%.

RHAT operating margins - 20%. Not MS' 50% due to competition.

RHAT operating profit = $240 million Net income = $160 million or $2.11 per share.

Pretty damn rosy scenario resulting in 34 times P/E.

Oops, forgot to adjust for time value of money, risk of stock market P/E devaluation, risk of Linux not supplanting Windows, risk that RHAT loses market share, etc.
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