I hear what you are saying but can't the same arguement be made of all companies?
Yes, it can. But it applies mostly to BIG companies. It is difficult but possible for small companies to grow at rates like 100% per year for a significant period.
It is difficult and virtually impossible for big companies such as Oracle currently is to exhibit similar growth. Rapid exponential growth is a great boon to investors so long as it lasts, but there are limits to growth, and you hit them pretty soon when you are already big and growing quickly. Oracle has already "hit the wall" in relational server sales (if they doubled sales they would have 100% of the market!) I just wonder how far away the wall is in some of Oracle's other markets.
Many posts on this thread seem to say, "Look at what Oracle has done over the past few years. Nothing has changed. The same can happen over the next few years". Well in fact a lot HAS changed: Oracle is already the second-biggest fish in the pond, and soon its growth will be limited by the size of the pond, regardless of anything the brilliant Mr Ellison does. The question is not IF, but WHEN Oracle reaches a low-growth plateau. And realistically, WHEN probably has to be inside the next 10 years. Maybe next year, maybe 8 years from now. Obviously if it's next year, Oracle shares are not good value. Equally clearly, if it's 8 years away, Oracle is a good buy. |
