>YHOO is a buy and forget.
Do you really buy and forget companies that have operating losses? If they don't make any money on operations for a few years, the new technology story will tire, and people will have to evaluate them based on asset value.
It will be as though you had bought a part of a 100 million $ money market fund, one that makes money on it's investments, but instead of returning the income to you, spends it all on software that never makes any money. Would you buy a money market fund like that? For ten times asset value?
Right now I think net asset value is about 10%-15% of the stock price. Unless I'm reading EDGAR wrong. Let me know if I am.
Sadly (because I'm in it :-) the Internet/www business story is losing a lot of its punch. It is going into that reality phase where the hustlers abandon ship and the folks who live and die by operating earnings have to take over, where market share fights are crucial and growth, if good, is not so good you can forget about making maney because of some alledged 1000% payoff in the sky.
I have been in the game business, the educational software/multimedia business, the productivity software business and the PC business when those bubbles burst, and I know the signs. Soon the carney barkers like Wired and Red Herring will throw down their megaphones, the rest of the rats will scurry down the ropes, and the people who actually can do this stuff will be left to pick up the pieces. Slowly and unexcitingly.
BTW, I actually like it in when rationality returns and the know-nothing fast-buck folks take a hike. For a while, the computer business is productive for everyone else (until the next time). But when it happens, Yahoo had better have operating earnings in tune with it's stock price. You have to keep a grip on this. To some very real extent, a web site is just a web site: the easiest way of doing business in the world to clone. (As yahoo has proved. They hardly invented the concept in their own area.)
Far as I can tell, the only reason Wall Street keeps selling the Internet story at this point is that there is nothing really exciting out there currently. But if nanotech, or new drugs for antibiotic resistant strains of bacteria, or real progress in antiviral vaccines, or practical materials from ceramic foams or diamond coatings, or hi-def tv manufacturing and sales (now mandated for next year), or anything else takes off at all watch out for these chrome-plated wonders in the internet biz, at least for a year or two.
-chaz- |
