The Dark Side of Valuation

Abstract

The comprehensive guide to valuing technology companies Projections for future revenues, earnings, cash flows, the impact of stock options, and more 5 detailed case studies cover the entire tech lifecycle: Amazon.com, Ariba, Cisco, Motorola, and a new IPO Presented by one of the world's leading experts in valuation State-of-the-art tools for assessing the value of any technology company Technology companies have exploded in importance, yet investors and analysts face unprecedented challenges in valuing them. In The Dark Side of Valuation, one of the world's leading valuation experts reviews every approach, demonstrating exactly how to adapt traditional techniques to minimize risks and maximize returns.Aswath Damodaran begins with an overview of the markets' dramatic shift towards technology stocks -- specifically new technology stocks. He then identifies key valuation principles and techniques, demonstrating them through five case studies that encompass the entire technology company lifecycle: Amazon.com, Ariba, Cisco, Motorola, and a new IPO-ready startup. Coverage includes: Adaptation of discounted cash flow models for tech companies with limited histories, shifting business mixes, and volatile stock prices The limitations of traditional accounting definitions in measuring technology company cash flows Superior processes for estimating future revenues, earnings, and cash flows Evaluation of the impact of management and employee stock options on share value and earnings multiples An in-depth assessment of PEG and price-to sale ratios Relative valuation: fundamentals, earnings multiples, and revenue multiplesWhat a refreshing book to read! Damodaran's book is essential if capital markets are going to accurately gauge the contributions of emerging companies...His insights are illuminating and his mastery of financial analysis is unmatched. -Louis Columbus Director of Marketing, Linksys

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