BGR,
He hasn't exactly said he doesn't understand the "new era" of technology, although that's what most people think.
What he has said is that it is very difficult to make firm estimates on the future earnings streams of technology companies. (especially for him)
As a value guy, in order to make a quality estimate of intrinsic value, you really have to know what the company might look like 5-10 years down the line.
Technology changes rapidly. Today's winners often become big time losers within a few years and often quite unexpectedly. It is therefore easier to value Coke, Proctor and Gamble, Gillette, etc.. than it is Oracle, Sun, Microsoft, and Cisco. You will have some big time disasters as well as scores in technology even if you understand them well. The same is not likely in more stable industries. I think it's a matter of preference and style.
I might add that both he and Bill Gates have said that technology stocks should trade at a "discount" to high quality consumer companies due to the added business risk. That means that both he and Gates think MSFT, SUNW, ORCL, CSCO, the internuts etc... are wildly overvalued. You have to remember they're not to keen on the consumer stocks at these prices and the techs are selling at 2-3 times the multiple. Those comments were made at a presentation they made together a little over a year ago.
Wayne |
