Study Of The Investment Value Of Internet Companies

In the last two decades of the twentieth century, Internet emerged, developed and boomed, which made deep impressions on almost every aspect, such as the world politics, economics, cultures and human life. In China, most economists and investors came to know the network industry through the NASDAQ tales about Yahoo, AOL and Amazon. However, people in China began to study the network industry and its price-decision function only after the May 19 Boom in 1999. The statistics show that over 200 listed companies in China have network-related businesses. Can we decide prices by the traditional way? If not, how can a new price-decision model for network shares be made? At the beginning, this thesis tries to analyze the value source of the network industry, and then designs a price-decision model that can convert the value indexes particular in the network economy, such as the number of registered users, page scanning rates, into comparable income and profit indexes. That's just the purpose of this thesis.This thesis is focused on how to design a price-decision model for network shares. It first uses a large number of data and facts to show that the worldwide rapid development of the network economy calls for people to make research on its value source and the suitable price-decision model. Then it defines several theoretical premises, and on this basis, it explains the three basic value sources of the network economy: direct economy, attention economy and scale economy. After analyzing the respective value creation of network equipment providers, network operation providers, ISP, ICP and e-business, this thesis, on the basis of the traditional P/E, presents the price-decision model of TEMA (Theoretical Earnings Multiple Analysis)-P/E/G. The last part of this thesis makes a simple price-decision analysis on Amazon Bookstore, the most famous e-business company in the world with the above price-decision model and the methods of comparative economy.This thesis consists of five chapters, whose contents are as follows:The first chapter is the introduction, the first part of which shows with considerable facts and data that network economy has become the internal driving force of the new economy of the 21st century, presenting the central point of this thesis: it has been required by the time to explore the value source of the network economy and the price-decision model of network shares. The second part introduces some recent views of the economics field in China concerning the network economy. The third part introduces the topic, methods and structure of this thesis.The second chapter makes a theoretical analysis on the value source of the network market. And before that, it defines several theoretical premises: the network is not only a tool, network technologies are productivities as well production relations, and network economy can create value. Then it clearly presents the three value sources of network economy:I. Direct economy, i.e., the directivity of network economy determines that network economy has production and marketing systems more economical than those of the industrial economy, and that the resources and transaction costs thus saved can be converted into the huge value resources.II. Attention economy. For the information that can be copied endlessly with zero marginal cost, the criterion for the value should be the attention: only the information that can get attention has value. This is the essence of network economy. As Internet gradually becomes the basic information platform of the information society, it will get the absolute control of the attention resources, and this means the transfer of vast value and wealth.III. Scale economy. Network economy is a typical economy with progressive scale returns, which is shown in the following two aspects: 1. The famous Metcalfe Rule, i.e., the value of Internet is the square of the number of the links. 2. The progressive return. With the rising number of the users, the rapid increase in income and the rapid decrease in average cost c...