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Technology Stocks : Altaba Inc. (formerly Yahoo)
AABA 19.630.0%Nov 6 4:00 PM EST
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To: Bill Harmond who wrote (3741)12/6/1997 12:55:00 AM
From: Bill Wexler  Read Replies (2) of 27307
 
Yahoo already has.

Yahoo has already discounted years of future growth - under the most optimal conditions.

By the time Amgen traded at Yahoo's market cap, it had already established a four year track record of growth which far outpaces anything I've seen from Yahoo over the last two. Amgen already had hundreds of millions in sales and damn near $100 million in profits (annualized), a blockbuster drug and spectacular return on equity. I'd advise you to check Yahoo's performance in this regard.

Paying $2.8 billion for yahoo is just plain stupid. It is nothing but a momentum gamble at this point - a gamble which the buyer is doomed to lose. Even if Yahoo comes in with great numbers next quarter (and there are already hints that the quarter will not be a "blowout") - so much expectation has now been built into the stock price that I believe it will tank anyway. That's the problem with momentum stocks...even if they "prove" their worth years later, they may never recover their momentum madness highs. I can assure you that Amgen never traded at a 1000 P/E and 50x sales by the time its market cap broke into the billion dollar region. Also note that Amgen was a unique biotech company with proprietary, and extemely profitable technologies. Yahoo is a web site selling banner ads, and unfotunately - just about anyone can get into this business overnight.
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