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  • Here's Why Amazon Won't Buy Netflix [View article]
    "The Bulls point out that Internet companies are worth 15 times cash flow. Yahoo (YHOO) trades at 14.7 times cash flow. But Yahoo has true Internet margins, with Net margins (when stock based comp is added back) of over 11% versus Netflix's 5%. Why would anyone pay the same multiple for less than half the net income?"

    Multiples aren't related to margins, they're related to growth. You can have a company generating a 1% net income margin trading at a high multiple if its income is growing fast.
    Jun 07 15:47 pm |Rating: 0 0 |Link to Comment
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