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I have this quote hanging up in my cube here at Fool HQ. It reminds me constnatly that valuation matters...

Scott McNealy, CEO of Sun Microsystems
from Businessweek, April 2002, when Sun was $5.68 per share

"But two years ago we were selling at 10 times revenues when we were at $64. At 10 times revenues, to give you a 10 year payback, I have to pay you 100% of revenues for 10 straight years as dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? You don't need any transparency. You don't need any footnotes. What were you thinking?"

That's just awesome. I'll probably bring this up again when Groupon and Facebook come public.

Bryan
TMF42
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