Sun peaked at a $200bn market cap in 2000, then crashed and was finally sold for $7bn to Oracle a decade later. Their Price to Revenue ratio at the peak was only 10!
They had actual decent revolutionary products too: From Java programming language to SPARC processors, StarOffice, MySQL, Solaris OS, VirtualBox & ZFS! They were involved in all important areas of tech.
This is what the CEO wrote to bagholders:
“At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes which is very hard. And that assumes you pay no taxes on your dividends which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?”
Little he knew... NVDA with Price to Revenue of 28 & 53% earnings shrunk YoY is considered cheap!
Submitted May 18, 2023 at 12:52AM by eichenes https://ift.tt/HBZ356x
