Wednesday, October 22, 2014

Earnings and revenues...

From Capital Account, and written in November 1999. I think it is also a lesson that repeats itself over time, and it reminded me of Graham and Dodd on the ‘Relation of the Future to Investment and Speculation’:
Coincident with the migration toward technology shares, the market has redefined what is meant by growth, away from earnings to revenues. This may be because many technology companies have little in the way of profits, and so revenues are seen as a proxy for future earnings. However, in our opinion there is no necessary link between the two, especially among unproven Internet companies.