Why be brief when you can continue to be a working example of why verbose accountants shouldn't be consultants? <g>
Common sense tells you that a typical company goes through different stages of growth before it reaches maturity (read: slow sales growth). At each stage it exhibits different sales, earnings and cash flow characteristics. Since the market is an anticipatory discounting mechanism, it will pay effectively pay differently for companies with different sales, earnings and cash flow characteristics. After all, different types of investors (individual and institutions) have different expectation levels. At the institutional investor level, for example, you have funds that can only invest in companies with dividends but then you also have highly speculative funds that don't invest in companies that pay dividends.
All you have to do is look at IDCC itself. Is it trading on the basis of current earnings? Of course not.
Considering that the typical licensing contract lasts 5 years, can you reliably project IDCC's mature earnings capacity beyond 5 years right now? Of course not.
Look around and try to observe different companies at different stages of growth so you won't get lost in abtractions. Every company ultimately aims to produce steady earnings and cash flow that can be readily discounted. The investing question that a growth investor seeks to resolve is how a company gets there, if it can.
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