(Myself, I sort of suspect that, if a stock doesn’t pay dividends, it’s mostly worthless. To quote some guy with a blog:
If you put your Mickey Mantle rookie card on your desk, and a share of your favorite non-dividend paying stock next to it, and let it sit there for 20 years. After 20 years you would still just have two pieces of paper sitting on your desk.)
Maybe it would help to think of a sole proprieter running a small retail business who starts with perhaps $500k in personal equity. He pays himself a relatively meager salary and invests all other net income back into the business to increase inventory, advertise, move to a better location or open another branch etc. After running this business for forty years its expanded successfully and worth $8MM dollars, even though it hasn’t paid a single dividend. Did he waste the last forty years of his life? Do you think he’ll be able to extract that earned value?
From there you should be able to see that a privately held corporation (only owned by family) could work exactly the same, and from that its not a leap at all to see how a publically held company can increase in value without ever actually extracting the value from it.
3) There is some other explanation, which I have not yet thought of.
Maybe the sales of the game on the other platform will be more profitable than the PS3 sales they miss out on? The margin for games is much higher than for consoles and you definitely can broaden your market by including 360 owners who do not wish to shell out $400 just to play that game. Is it conceivably possible that Sony knows as much or more about the gaming industry as you do?
(Myself, I sort of suspect that, if a stock doesn’t pay dividends, it’s mostly worthless. To quote some guy with a blog:
If you put your Mickey Mantle rookie card on your desk, and a share of your favorite non-dividend paying stock next to it, and let it sit there for 20 years. After 20 years you would still just have two pieces of paper sitting on your desk.) Maybe it would help to think of a sole proprieter running a small retail business who starts with perhaps $500k in personal equity. He pays himself a relatively meager salary and invests all other net income back into the business to increase inventory, advertise, move to a better location or open another branch etc. After running this business for forty years its expanded successfully and worth $8MM dollars, even though it hasn’t paid a single dividend. Did he waste the last forty years of his life? Do you think he’ll be able to extract that earned value?
From there you should be able to see that a privately held corporation (only owned by family) could work exactly the same, and from that its not a leap at all to see how a publically held company can increase in value without ever actually extracting the value from it.
3) There is some other explanation, which I have not yet thought of.
Maybe the sales of the game on the other platform will be more profitable than the PS3 sales they miss out on? The margin for games is much higher than for consoles and you definitely can broaden your market by including 360 owners who do not wish to shell out $400 just to play that game. Is it conceivably possible that Sony knows as much or more about the gaming industry as you do?