qwik, what would you pay for a hardware company that grew its product revenue from $8.6 billion to $10.1 billion from june 98 to jun 99? That's all of 17.5%. What would you pay for a company that earned about $1.6 billion on operations in 99 and was growing its top line about 20%? What would you pay for a company that had 14% operating margins and 14.5% roa and 25% roe? What would you pay for a company with $6 of book value.
In NORMAL times, a hardware company with those kind of metrics would probably sell at 30 times next years earnings, or 35 times trailing earnings. In NORMAL times, this kind of company would trade at three to five times book.
What does this .com trade for in THESE TIMES? SUN.COM trades at 15 times book. It trades at 66 times trailing earnings. If we lived in NORMAL TIMES, i.e. when fundamentals mattered, where would SUN.COM trade? Well, if SUN.COM traded at 35 times trailing earnings ( which is GENEROUS) the shares would trade at $49 (that's $24.50 on your new stock.) In NORMAL TIMES, SUN.COM would not be trading at $89. How much .com fluff has Scott&ED TV put in the stock with their press release business plan? How about $31 billion of .com fluff? That's right, the market thinks JAVA, JINI, and the STAR Portal are worth $31 billion. Imagine that bubbleheads. You now are the proud owners of a .com . And your saviors, Scott&Ed, has .comd' your future. You have $40 of .com in your stock right now. Essentially the Scott&Ed show has given you TEN YEARS of future appreciation, in two years. this year and last. PAYABLE IN ADVANCE.
Has SUN.COM ever made a dime off of java, jini, or star? No. Of the 15 or so thin clients that the wsj reviewed on Friday, does any one of them pay a toll to Scott&Ed TV? No. Does any "thin" server run SUN.COM software? No. has any company ever made any real money selling programming languages? No. Microsoft gives them away. And SUN.COM has never proven they can make one thin dime off of Java.
SUN.COM grew product revenue 17.5% year over year. Someday, that will matter to the market. When it does, there are $40 of.com nonsense that could go in a flash. And that would just get you back to 35 times earnings.
Has anyone reserved SUNBUBBLE.COM?
of course, none of this matters to you people. Balance Sheet, Income Statement, Cash Flow. Huuh? Excuse me? What on earth are you talking about? |
