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Bill, in another response to your question on book value, note that tech stocks often sell at 8 to 10 times book value, and that isn't considered particularly expensive. I like to buy tech stocks at two to three times book value, but I include in book value and estimated value of proprietary, intellectual property, which often is ignored in traditional balance sheets. Thus, someone with only financial training might think that SanDisk is no great buy, simply because there are so many other tech stocks in the same boat. But when you look at SanDisk's position in flash memories, and particularly the patents covering its technology, the picture is a lot brighter. Unfortunately, most financial analysts really don't know how to evaluate proprietary technology. It's very analogous to what Warren Buffett, the guru of Berkshire Hathaway, says about newspapers. The papers that have no competition in their trade area, he says, are far more valuable than the papers with competition. Seem obvious, but you'd be amazed how many people ignore the lesson. Art |
