PRINT THIS PAGE Valuing dot.coms after the fall
17/10/2001. Source:Timothy M. Koller.
The internet roller coaster may rank as the market's most dramatic upheaval over the past 20 years, but it hasn't been the only one. Remember biotech? Real estate? Leveraged buyouts? Each fad was accompanied by the conviction among market bulls that, this time, classical notions of value creation were hopelessly out of touch with the new vision of investing. But in truth, investment values always eventually return to a fundamental level based on cash flows says this article from the McKinsey Quarterly. Don't abandon the internet altogether, but investors must understand the real sources of the sector's value. Most ways of generating revenue have already been unearthed, so watch out, warns this article from Mckinsey Quarterly in particular, for business models based on future revenue for anything people won't pay for today.
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Taken from McKinsey Quarterly, 2001 Number 2
The McKinsey Quarterly, a journal in print and online from McKinsey & Company, featuring the latest thinking on business strategy, finance and management.
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