>
>I say there, and I'll say again, that Jensen is really onto something in
>his argument about free cash flow - that mature corporations throw off more
>cash than they can reinvest at a "satisfactory" rate of profit.
>
I don't think that Jensen has "discovered" anything (but if you give reference with date I can be sure). Simple statics prove the point: during investment phase cash flow is negative as plant is constructed, equipment bought, products designed and market established. Once firm/industry matures then cash flow turns positive.
a) if there was no prospect of positive cash flow after investment phase was complete, then investment would not have been made in first place b) funds for investment can only come out of cash surplus generated by mature companies
Too much concentration of long run equilibrium clearly rots the mind.
JML