Foundry met that end; Brocade Communications (BRCD) snagged them for just under $3 billion in 2008. Extreme did not, and now its stock stagnates. It will continue to stagnate unless a buyer comes along. There's just no there there with a company like Extreme. There never was, likely never will be.
In 1999, Jeff Bezos made it perfectly clear that Amazon would be different. Bloomberg Businessweek asked him a familiar question: Any timeline on when you can throttle back on expenses and become profitable? Bezos answered this way:
Our strategy is very, very clear: We're focused on long-term returns for investors. And to throttle back on investment now would be shortsighted. When we have less opportunity, that will probably happen. But as long as we have lots of opportunity, we're going to continue to invest commensurate with that opportunity in a very disciplined and methodical way, but in a long-term context. To do anything else, we believe, is irrational.
I keep that clipping in my back pocket.
I also keep a Haruki Murakami quote with me: "If you can't understand it without an explanation, you won't understand it with an explanation."That said, I have offered explanation after explanation. And I am beginning to come to a somewhat painful conclusion. While I generally do not believe in Bushian dichotomies, in this case it must just be that two different types of people exist in the world: Those who understand perpetual startups and those who do not. While I can see why a big number P/E ratio might scare investors, I cannot quite understand why so many refuse to acknowledge Jeff Bezos's history and AMZN's massive stock price appreciation over the last dozen years. It's almost as if the notion of aggressive reinvestment in the business is a foreign concept. You know, spending money to make money. It's not foreign. As I explained last week, it's a wholly American idea. I'll run the risk of sounding like a broken record because it's an important message to, at the very least, debate. Don't allow P/E ratios to scare you out of great companies such as Amazon or lure you into portfolio-sapping value traps. Follow @RoccoPendola At the time of publication, the author was long FB. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.