Software firms are over-valued, says Huawei

Inflated valuations for software companies are discouraging possible acquirers, says Chinese giant Huawei. The Chinese giant’s global IT chief Yelai Zheng told us the high prices software companies asked made them less attractive to Huawei. “Communications companies are not expensive but IT and software companies are,” said …

[Byz]

You can do...

The best requirements gathering, the best design...etc

But if your code is crap then it is all a waste of time, good coders are worth their weight in gold (or even saffron)

[John G Imrie]

Re: You can do...

I've seen the size of some of those coders, I'm not sure there's enough saffron to go around.

[Anonymous Coward]

Re: You can do...

True, but the same goes for good hardware engineers.

His basic point is correct - the valuations of trendy software companies are ridiculously high, looked at from the value of their software. How much would it really cost to replicate a Whatsapp? Virtually nothing, compared with their valuation. All their value's really in their first-mover advantage, market share and any dubious software patents they have to chuck under the wheels of a competitor.

[Doctor Evil]

Re: You can do...

All their value's really in their first-mover advantage, market share and any dubious software patents they have to chuck under the wheels of a competitor.

Aye, there's the rub.

[Anonymous Coward]

Paper valuation

Software companies are convenient for Wall Street because there is such a divorce between their assigned value and any residual value in plant and buildings. A hardware company has all sorts of stuff which can be evaluated by Warren Buffett type analysts. A software company is all about lovely intangibles that can be pumped full of air. How much is a tulip worth?

The game only stops when a real world event happens, something fails and some investors are left holding the baby.

Incidentally, is Samsung's marketing budget really as big as all that? I keep seeing the figure for the annual spend for the entire group treated as if it was the three month figure for the phones. Apples to apples comparisons [stet] are quite hard to find.

[Anonymous Coward]

Definitions

"70,000 of Huawei's 150,000 staff in R&D"

This could be design of new products and not actual R&D. It all depends on how they define R&D.

[Anna Logg]

Re: Definitions

You mean development as opposed to research? Design of new products was considered development in the various companies in the field I've worked for (including Nokia & Huawei.)

[Anonymous Coward]

Re: Definitions

Rip off research and Development.

[Pascal Monett]

The Facebook example is not really pertinent

When that deal went through, the entire market scrambled to pick up its jaw.

That acquisition was made for a ridiculous amount of money and everybody knew it.

[Trevor_Pott]

Re: The Facebook example is not really pertinent

That acquisition was made for a ridiculous amount of money stocks and everybody knew it.

T,FTFY

[John Brown (no body)]

Overvalued

Company wanting to buy other companies thinks the target companies are overvalued.

Film at 11

[Anonymous Coward]

Same as IP, chip designs and anything people do. These Chinese firms don't value it at all. It's just there to be copied.

Designing a good user interface is actually not that easy. The interface can be the difference between a great user experience, loyal customers and a poor user experience, with a raft of poor reviews.

[bigtimehustler]

"Inflated valuations for software companies are discouraging possible acquirers, says Chinese giant Huawei" - so basically, if things were cheaper we would buy more of them. Rocket scientist this guy is. It is all very well to say things you can not afford should be cheaper, but if the share holders are willing to buy shares at those prices, then that's just the price and the way it is!