PE ratios of 100
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| Author | Content |
|---|---|
| Alcibiades Mar 11, 2006 12:01 PM EDT |
Nothing, not this, not anything, nothing justifies PE ratios of 100. If you look back at recorded history since the time when PE ratios were first available, in 99.9 percent of occasions when you could have bought stock in a mature company - lets say one with revenues of greater than 1 billion in today's dollars, with a PE of 100 or greater, you would have lost money holding it for more than one year. As to whether they should buy Sun, probably not. All acquisitions, with very few exceptions, destroy shareholder value for the acquirers. It is the triumph of hope and ego over experience. This one would too. What should they do then? What they are doing - sell out while they can. Or buy something real with their money, that they cannot wreck. Not a company. Real estate maybe - its overpriced, but not as overpriced as Google. Maybe commodities. Maybe ETFs? Again, they are overvalued, but not as badly as Google, and if they diversify into stocks that are less overpriced than their own, over time they should do better than if they left the cash in their own. Steve Case found this out, but he bought only one stock. Mistake. The greater the variety the better. 50 is closer than 500 whatever they do. It is not really their fault that Wall St has gone insane, and they might as well take advantage of it. But buying Sun is not a way of doing this. |
| tadelste Mar 11, 2006 12:50 PM EDT |
I'm going to write an article about this, but I might as well say it now. Lots of rumbling is going around town that Dell will buy Sun and break it up. That's right, break it up. Evidently, Dell doesn't have the executives to run a company like Sun and doesn't want their management people. They aren't Compaq who bought DEC or HP who bought Compaq. But Dell needs a channel because the old on-line model isn't working any more and they can't provide service like they once did. Dell needs big iron to compete with HP and IBM. They need service. They don't want the communities. They would sell Java and the remaining communities to IBM and Novell. They would sell Storageek to EMC. Dell would have a windfall from the break-up because the pieces are worth more than the whole. From my point of view, this isn't speculation but it is unconfirmed. It's more of a leak. Evidently, Solaris10 isn't the lapdog Sun expected. Google has no interest in buying anything but on-line businesses and they are cautious. But, their stock should perform like Amazon and Ebay. The verb for search in this world is google. |
| jimf Mar 11, 2006 1:17 PM EDT |
tadelste, I hate to say it (well not really), but, yours sounds like a likely and mostly positive scenario. Ultimately good for everyone... well, maybe not for Sun ;-)... |
| tadelste Mar 11, 2006 3:18 PM EDT |
It might be a merciful situation for Sun. I'm not pro-life when it comes to Sun, Microsoft and a few other "companies". |
| bdumm Mar 11, 2006 4:34 PM EDT |
merciful? lol let mr. shinny teeth eat his cake..... |
| tadelste Mar 12, 2006 6:43 AM EDT |
OK. You got me. Mr. Shinny Teeth? You mean the soon to be unemployed Chair man of Standford UNIX Network? |
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