Don't invest in Internet, warns Gates
Many of these companies, some of them now valued by stock markets at billions of dollars, would not survive the competitive pressures of the World Wide Web, he said.
Stressing that he was a software specialist and not an expert on stock valuations, Mr Gates said he would not advise any friend to invest in Internet companies, and those who did were taking on "monumental risks".
The billionaire software entrepreneur said that the pace of change in Internet technology and the degree of commercial competition that the net makes possible made projections for the future revenues of many of these companies highly suspect.
In a surprising observation which seemed to question the very high valuation the stock market puts on his own company, Microsoft, Mr Gates told a meeting of journalists at the World Economic Forum in Davos, Switzerland, that he thought that all technology stocks were much too highly valued. "They should be selling on lower multiples than ordinary companies because this business is changing so rapidly, and as a consequence it is impossible to predict an earnings stream into the future," he said. "Disney and Coca- Cola are in a far more stable position in the market place than we are, and with them you know they will be making good profits for years to come. With many tech companies this is not the case".
Mr Gates predicted that the balance of benefit from the rapid growth of electronic commerce would be with consumers rather than the businesses that operate on the Net. "Many old established distribution companies are now appearing on the Internet and the competition is going to be intense," he said.
"Investors are rushing in like a gold rush. In some respects this is a good thing since it attracts huge amounts of venture capital into the business and that accelerates the pace of progress and change in this industry."
Mr Gates said Microsoft wouldn't rule out buying an Internet company, even at current valuations. "Sometimes there is a piece which fits into our strategy which might make it worth paying these valuations, but that is very different from what the company is worth on a stand-alone basis."
Mr Gates thought it a terrible indictment of European enterprise and business that the composition of its top 50 companies had changed so little over the past 25 years. In the US, only three or four of the top 50 companies are the same. In Europe it was the other way round.
He thought it unlikely that Microsoft would still be in its present position in the league table of US companies in 25 years time, given the degree of competitive pressure and change it has to respond to.
Looking relaxed and at ease with the world, Mr Gates said he wasn't allowing the anti-trust case against Microsoft in the US to interfere with either his life or his company. There are more important things in life, he said, admitting that he now took his daughter to school every Wednesday morning before going to work.
Children's bookseller wins The Independent's new author search
Board creates magnetic field to achieve lift
- 1 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 2 Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
- 3 Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
- 4 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
- 5 Paralysed man Darek Fidyka walks again after treatment by British doctors on brink of 'cure'
Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
Oscar de la Renta dead: Legendary US fashion designer dies after long cancer battle aged 82
Oscar Pistorius: The brutal prison life that awaits disgraced athlete
Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
Super-sized ships arrive in Britain: How big can they get?
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Jose Manuel Barroso warns David Cameron against making 'historic mistake' over immigration reforms
Worst Airports of 2014: Poll names Islamabad airport in Pakistan worst in the world
iJobs Money & Business
£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...
£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...
£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...