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Change Can Lead to More Change and Another Competitor

We don’t do a lot in technology. Successful technologies change something, creating an efficiency or demand that wasn’t there before. But the very fact that the change happens means that somebody else can come along and change it again. If, because of the threat of technological obsolescence, I’m uncertain about a company’s cash flows several years out, I’ll put a big discount on those cash flows and conclude they’re not worth much. Because Wall Street tends to put a large value on the future cash flows of technology companies, we rarely find one that we consider very attractive.