Can You Pay Too High A Price For Quality?

This past week I have read two somewhat opposing thoughts on valuation.  Both are an attempt to consider whether you can pay too high a price for a company.  The first is an excerpt from Scott McNealy, formerly of Sun Microsystems, talking about the irrationality of paying ten times revenues for his company.

The second is a valuation of Microsoft in 1990, attempting to determine what a fair multiple would have been to pay to obtain a sufficient rate of return on your investment.

With thanks to Twitter users @jtepper2 and @BadaBingCapital.


Sun Microsystems

High


Microsoft

High


Happy Investing!

 

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