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Technology Stocks : Wind River going up, up, up!
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To: mac who wrote (888)4/21/1997 6:35:00 PM
From: Mark Brophy   of 10309
 
Book value is a very sensible measure for a SW company.

Intel has fabs that will be worthless in 3 years. Other companies have buildings that will be torn down in 20 or 30 years. The book value of software companies consists mostly of cold hard cash that can be used to hire employees, pay salaries, and buy equipment.

Let's say you own a whole company, every share, and it indeed took you 9 years to "break even" on yearly earnings. Then in 9 years you own, and have paid for in full, the whole company. Now assuming that the company, i.e., WIND, is still in business you also own ALL the future earnings of the company from then on. So.. in 10 years if it earns $6 a share, and in 11 years it earns $7, then you ALSO own that.. forever and ever.

That's a very radical assumption. Apple had a truly astounding ability to make money 9 years ago that was much greater than Wind River's ability to earn money today. If you owned all the shares of Apple and tried to sell it today, you wouldn't receive anything remotely close to book value.
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