Sure, if you are dumping all your c/f into R&D. But, in the end, DCF, P/E, P/S, etc.. should theoretically give you a similar value of the company. Since, as long as your R&D cash outflows are creating NPV postive projects then you are always adding value.
I think the best way to put my valuation of sex.com into perspective is that if I were to want to buy the domain sex.com I would first care about whether or not it will generate more cash inflow than outflow. I assume this to be true, as server costs + domain reg expense + my time < fees from adult site sign up commissions. Now, how much would I pay for those future sign up fees? Well, I sure as heck won't pay dollar for dollar for the estimated signups in the future. I am not looking to get my money back over a period of time, I want some ROI. Thus I discount them (by some risk rate greater than investing in nice ol' safe GOV bonds).
Or, as George pointed out, I may use M&M (applying some Black-Scholes) to value the embedded option if the cash flows are not positive right now. Either way, value should be in expected cash flows. I am not sure why you disagree with cash flow and like profit. Profit is an accounting term, and you can make a company look profitable in countless ways (while it burns cash).
I may have brought this thread down the wrong path, I apologize. I just wanted to bring a simple model into play that enables other people to see how they may (or may not) value an asset.
I enjoy the debate and thank you 'options', for at least taking the time to read my posts.
