Examining the R&D Line

It's not what you invent, it's what you invent and sell.

That would seem obvious, but when I look at the income statements of many of today's companies, I see a lot of money poured into research and development -- billions, in some cases.

But do I see returns on those dollars? That part is not so clear, especially for those of you who invest in research-heavy businesses like pharmaceutical, biotech and general technology. So listen up.

A recent Booz Allen Hamilton study found little real correlation between R&D investment and business performance. The only direct link was between R&D and gross margins relative to the industry. ...