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Please tell me you didn't just go off the market cap. (though it is obvious you did...)
Market cap |= assets
AMD would be a steal at $7.3 billion, since it is worth about $14-15billion and Nvidia would be a terrible buy, since it is worth only $3-4billion.
Anyways, just letting you know that's not how things work.
Last edited by LordEC911; 09-30-2007 at 03:30 PM.
Market cap most certainly is how such things work. The value of a company as a going concern often has little relation to book value much less just a measure of its assets. The value of a company is based on what the market is willing to pay for an ownership interest in that company, i.e. the shares of that company's stock.
http://en.wikipedia.org/wiki/Market_cap
Market capitalization represents the public consensus on the value of a company. A corporation, including all of its assets, may be freely bought and sold through purchases and sales of stock, which will determine the price of the company's shares. Its market capitalization is this share price multiplied by the number of shares in issue, providing a total value for the company's shares and thus for the company as a whole.
Many companies have a dominant shareholder, typically a government or a family. Most stockmarket indices (DOW, S&P 500, BSE, FTSE, DAX, Nikkei, MSCI) adjust for these by working on a "free float" basis, ie the market cap is the value of the publicly tradable part of the company.
Note that market capitalization is a market estimate of a company's value, based on perceived future prospects, economic and monetary conditions, and therefore largely independent of a company's history. Stock prices can also be moved by speculation about changes in expectations about profits or about mergers and acquisitions.
So you relink what I linked originally?
Market capitalization represents the public consensus on the value of a company. A corporation, including all of its assets, may be freely bought and sold through purchases and sales of stock, which will determine the price of the company's shares. Its market capitalization is this share price multiplied by the number of shares in issue, providing a total value for the company's shares and thus for the company as a whole.
Many companies have a dominant shareholder, typically a government or a family. Most stockmarket indices (DOW, S&P 500, BSE, FTSE, DAX, Nikkei, MSCI) adjust for these by working on a "free float" basis, ie the market cap is the value of the publicly tradable part of the company.
Note that market capitalization is a market estimate of a company's value, based on perceived future prospects, economic and monetary conditions, and therefore largely independent of a company's history. Stock prices can also be moved by speculation about changes in expectations about profits or about mergers and acquisitions.
You didn't seem to understand what you linked. Takeover premiums are based off of market cap, "the public consensus of the the value of a company". Thus, just as Shintai said, any takeover would need to pay the market capitalization plus perhaps 20-25% extra for a takeover. A price well in excess of $20 billion for Nvidia.
You stated that Nvidia was worth "only 3-4 billion". It's absurd to value almost any company, much less a fabless semiconductor company based on assets or book value. Typically the market would typically value such a company as is does the vast majority of companies, based on the discounted value of its expected future cash flow:
http://en.wikipedia.org/wiki/Valuati...ted_cash_flows
Nvidia's high market value is a reflection of its high current and expected future profits, while AMD's low valuation is a reflection of its far lower future profit expectations and current losses.
You need to argue better, because you are so wrong it hurts.
And you dont even understand what you link at.
If I could buy nVidia for under 20billion it would be a steal, since all the stocks are worth more. AMD aint worth 14-15billion but 7.3billion. You seem to forget their debt is pulling them in the other direction aswell.
But nomatter what, to buy something you need to buy the stocks. And the stock value defines the value of a company.
Last edited by Shintai; 10-01-2007 at 12:24 AM.
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