>Not sure that this works in the glorious new world of EBITDA.
>Depreciation is a non-cash item -- that's part of how these companies
>sustained their huge valuations in the first place. (as an aside, I'm
>currently having a really nasty argument with a couple of telecoms
>analysts over the stupidity of talking about earnings before interest,
>tax and depreciation when the context is european telcos which are
>loaded up with their interest bill and looking down the barrel of
>frightening capex).
Well there is a point to doing EBITDA, in the sense that you can determine whether a business has any operational life to it. A hihgly indebted firm that is doing ok operationally can be "restructured" (i.e., renegotiate its debts, or go through bankruptcy). The dot.coms, though, still came in below 0 BITDA, so no amount of restructuring, short of touching the hem of Jesus' garment, could save them.
Doug