The Dark Side of Valuation

"What makes technology firms, and especially new technology firms, different?"

"While beating earning estimates can be viewed as a positive development, some technology firms adopt questionable accounting techniques to accomplish this objective."

"Given that most of the taxable income of publicly traded firms is at the highest marginal tax bracket, why would a firm's effective tax rate be different from its marginal tax rate?"

"While the determinants of fundamental growth remain the same for all firms, estimating these inputs for technology firms can pose special challenges."

"The advantage gained by analysts from firm-specific information seems to detoriorate as the time horizon for forecasting is extended."

"Where, you might ask, is there room in the growth equations for qualitative factors?"

"How can the likelihood that a firm will not survive be built into a valuation?"

"The argument that some or many investments have valuable strategic or expansion options embedded in them has great allure, and there is a danger that this argument will be used to justify poor investments."

"You cannot avoid dealing with fundamentals by choosing to do relative valuations."