>> "...look at the cumulative retained earnings and compare this to what was taken from the public in selling stocks."
Zeev, you bring up a good rough measurement, but it has its flaws, too, For one thing, INTC has been around a lot longer that CSCO, thus has had a longer period to return that initial investment.
Another important exception to the earnings/OPM ratio is the value of the intellectual property a company has accrued. A company may use IP to create a very strong market position, yet that IP shows up not at all in the financials, as it is financially "intangible" in present value.
QCOM is my favorite example this situation. QCOM has "returned" very little of its initial investment in earnings, but the intangible value of its IP is great. QCOM "owns" 3G wireless telecom standards. Your favorite bu$$ is another example of a company with large IP values which don't show up in the financials.
regards,
phill
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