AboveNet: Internet Bandwidth Finally Generates a Profit
Zachary Scheidt submits:
A decade ago, investors were willing to pay any price for a company associated with the internet. It didn’t matter whether the company made money or not – or even whether they had projections for eventually turning a profit. Instead of earnings, investors looked at eyeballs, unique users, revenue growth, and plenty of other less important variables. Analysts who believed that stock prices were too high were ridiculed as a “new age of investing” made old ratios and metrics obsolete.
But as is usually the case, fundamental valuations eventually became important and many of the high-flying internet darlings came crashing back to earth. Some of the companies that were hit particularly hard (many of which had to declare bankruptcy), were the fiber companies which invested in the infrastructure which carried information across short or long distances. The investment in these networks was huge and unfortunately, the companies couldn’t stick around long enough to reap profits from their ballooning costs associated with the network buildout.
Investing, Long Term Investment, stock market | admin February 19, 2010
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