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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 242.87

-0.7%

1:44 PM EST

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To: Bearded One who wrote (101280)	4/16/2000 11:43:00 PM
From: Bill Harmond	Read Replies (2) of 164685

>>People don't realize that even for a company that is growing at 50% or 100% a year, it will never justify its stock price at that rate if the P/E is 200 or 300. Your point is well taken, and I used that yardstick for years. However, a company emerging into the black with that kind of bottom-line growth would be a different story. Several of the Internet leaders are growing much faster than 100%. Vignette is growing at 60% sequentially, but still reporting losses. Obviously there's more value there than the PEG method allows. Additionally, there are other factors involved. The market position, scalability, and likely future cash flows from the business are not represented in a hard number of any kind. Go back to more "rational times", say 1994-95, and track the progress and PEG of AOL. You'll see that AOL never followed the PEG rule. That said PEG is a great sensible tool for valuing many companies.

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