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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: chic_hearne who wrote (85251)3/25/2001 7:52:49 PM
From: marginmike  Read Replies (1) of 436258
 
if a company has 30 billion in Revenues and makes 300 million or a company has revenues of 4 billion and makes 1.5 billion which company would you pay more for if your were buying it? Its common sense, a company is worth a certain multiple of Earnings not revenue. When somebody buys a small business revenues are pretty irrelevent. I could careless about Revenues unless you are analysing if profits are sustainable. Like if cisco grows income and revenues are flat and decline then its an issue. If Qom had kept its handset and Infrastructure divisions their Revenues would be closer to 8-10billion but they would be making less actually money. I am not guessing what the multiple on Earnings should be, at 25 I would buy(its 39 on 2001 now). The revenue point has nothing to do with bull or bear markets its just good business.
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