>> I mean how many people do you know that made millions off of shorting Microsoft, Cisco, Dell, or Intel?
How many people have made millions shorting MU, AMAT, NSCP, PRST, IOM, C$CC, A$ND, COMS, SHVA, NN, NOVL, AAPL, DIGI, DDIM, ZITL, etc?
My point is that for every DELL, M$FT, INTC, C$CO, etc. out there, there are 1000 companies that don't measure up. People that short YHOO are betting that YHOO management won't execute brillantly like a Michael Dell, a John Chambers, or a Bill Gates. If you have brilliant people running YHOO they will find a way to make money, and in 10 years this market cap will look like a bargain. The point the bears are making is that at these valuations YHOO could execute brilliantly and maybe the stock price still wouldn't make much progress for a while because the valuation is stretched to the limit right now. Look out below if YHOO even stumbles for a short time.
Just remember though, for the last few years people (including myself) have been saying that the PC business is extremely competitive, frought with low margins, PC growth has to slow down, and DELL doesn't have a dominant or monopoly position like an INTC or M$FT. Yet a simple but effective business model has made DELL investors DELLionaires practically overnight.
Considering the revolutionary way the internet is affecting how we communicate, learn, and transact business, coupled with the immense efficiencies and direct marketing reach, it is not unreasonable to imagine how a savvy management such as YHOO's could not surpass the wildest of expectations.
Ask yourself this. Michael Dell built a $60 billion dollar company by selling relatively low margin PC's, in an industry growing at 15-20% a year, all the while controlling only 7% of all PC sales worldwide.
How hard is it for YHOO to surpass that performance in an industry growing far more than 15-20% a year, with expanding margins, and a direct marketing business model that far exceeds that of DELL?
I better sign off before I get too excited and place an order to buy YHOO on the open monday. |
