>>Eric, if you can venture a guess, I'd like to know
>>what you think YHOO's market cap will be when MSFT
>>hits $1T market cap?
Randy - any guess on my part would be exactly that - a pure guess. Because in truth, I have no idea - it could be $500 million, it could be $500 billion. And it actually could be a long time before MSFT hits a trillion (if it ever does).
From what you write, you appear to be a firm believer in the internet and the prospects it provides - this we have in common, for I too believe in the technology. However, where we differ is in our evaluation of Yahoo. You see a portal that grabs a lot of eyeballs and commands a lot of attention - I see a company with meager profits that commands a lot of hype. Yes, their sales growth is impressive - but where is the growth coming from? Advertising? Do you know? (I don't)
Yahoo's profits are not what I would expect from a $45 billion company (do you realize that for the past 12 months, Yahoo net income amounted to only $34 million, giving them a PE ratio of over 1000 at today's closing price - and please feel no need to remind that PE ratios have no bearing in valuing internet stocks). 2.5 cents of Yahoo's blowout 14 cent proforma net income number came from investment income - one has to wonder if management decided to sell off some of their $800 million in marketable securities to boost the number a bit. I don't put much faith in Yahoo's registered user numbers or in their daily page view counts - I know such stats are open to scrutiny - the numbers may or may not be accurate - but more important, they may or may not have an impact. And how much of the user base number can be attributed to what I will call "false user base inflation" (due to single users setting up multiple accounts - or even one time visitors that never return)? It would be more interesting to know from how many users Yahoo is actually getting revenue (do you know?).
YHOO is a stock that has been cut in half this year - and looks like it may rebound, effectively doubling. I bought YHOO once - at 220 in April - sold it around 180 shortly thereafter. I have no taste for such highly volatile investments. So, now, even though you appear to be urging me to do so in your post, I will not buy YHOO. And as such, if YHOO climbs to a $500 billion market cap - well, I'll miss out, and I won't become a billionaire like some YHOO longs on this thread - and I will continue my humble existence at my present income. But you know, I don't really care. There are other ways to make money. And I'm certainly not about to buy stock in a company I don't believe in.
Thanks,
-Eric Wells |
