[H-GEN] Red Hat IPO

[Martin Pool]

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From: Raymond Smith <raymonds at uq.net.au>

> > Just thinking about it...how do the punters reckon Red Hat is going
to make 3
> > billion bucks out of Linux? Or $300 million per annum on a P/E of 10
say. At
> > RH's recommended retail of $80 a copy that is 3.75 million copies to
be sold a
> > year before any commissions, expenses etc.

People are buying it for the expected increase in stock price, not for
the dividends.  Even relatively traditional tech stocks work that way:
if nothing else, companies have to pay tax on profits, but not on
growth.  (Well, kindof).

Free Software is near the peak of it's hype curve, and people want to
express confidence with money: RedHat is one of the few easily-visible
ways people can do that.  If nothing else, it's a reasonable contendor
against the dominant model, and people want insurance against its
collapse.

> Indeed. It does seem to be an overly high valuation IMHO. Is RedHat
really
> that much better than, say, MINCOM?

I wouldn't touch that one with a twelve-foot Hungarian.  ;-)

--
 /\\\  Mincom | Martin Pool          | martinp at mincom.com
// \\\        | Software Engineer    | Phone: +61 7 3303-3333
\\ ///        | Mincom Ltd.          |
 \///         | Teneriffe, Brisbane  | Speaking for myself only




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