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Technology Stocks : Altaba Inc. (formerly Yahoo) -- Ignore unavailable to you. Want to Upgrade?

To: fut_trade who wrote (19747)	2/5/1999 5:07:00 PM
From: Paul Merriwether	Read Replies (1) \| Respond to of 27307

>>It was in the opening chapter of one of his books -- specifically Perot's old company EDS had a P/E of about 500 sometime in the 70's. >> I just present an easy case. Microsoft when it IPO'ed had a capitalization of less than 2 billion and a P/E of about 75. Now, less than 75 years later(actually about 13 years later), they have cash reserves of about 20 billion, so they can buy their original shares 10 times or more over. Looking at the expected growth rate when analyzing equities is quite standard. The "earning rate" if constant(zero growth) means that you can compare that equity to a bond and price it accordingly. (I think all the above is standard stuff that you could probably check on in Samuelson etc.). ...(P/E) is(or should be) a function of growth rate >> Wasn't it the Motley Ghouls that said that? Now don't go all ad hominem on me man! Don't care who said it, but it makes sense. You would pay a premium for a company that's growing(its topline and bottom line) fast, because its "E" is overtaking its "P". So, a company that's selling at a P/E of .5 the expected growth rate is a bargain and a company with a P/E of 2x the growth rate is over-extended. #include <disclaimers.h>. Also, above is not a defense of yhoo. I am bearish on yhoo myself. have a good one... -PWM Read Mark Twain. He was one crazy dude, a lot like these "new paradigm internet bulls", just born a century too early. He prolly would have made a killing in this net mania.