This book shows how to successfully research a company who to-see and what to ask-before investing any money. It shows investors how to use innovative techniques and fundamental business analysis to spot Wall Street bargains.
The main premis is that a tech-product's life can end quicker than expected, or some other event can damage earnings, like a write off. The uncertainty can lead to the stock becoming attractive. The management/ new management introduce the second generation product or otherwise go on to grow the business at at least 25% compounded.
He discusses filters such as absolute Price/ Sales Ratios, and absolute Price/ Research Ratios, and a 'formula' to predict future margins.
He also covers some basic qualitative-analysis points - like CEO's, Marketers, Fin. Strength, Market Leadership/ Potential, the Market etc.
I know that Dell, and Oracle have had negative earnings quarters before, because their growth has led mistakes - and listened and learned.
However don't assume you will be able to use the ideas contained in the book for investments without being a professional investor.
It is useful as an investors view on what makes a super-tech-company, and what entrepreneurs should look out for in high-growth situations.
He currently runs Fisher Investments.
Fisher spends a lot of time discussing how to make money off the "Glitch". Basically, he believes that many Super Stocks are stocks that have been hit by a "Glitch". A "Glitch" is a temporary setback experienced by a company that makes the out of favor (e.g. product life cycle delay, revenue short-fall, etc.) This attitude is indicative of his value-orientation in investing. In other words, his fundamental analysis may find a great stock, but he will wait for a pull-back from a "Glitch" to a more appropriate PSR before investing.
Overall, the concept of PSR is not so different from other valuation measures for "low-priced" stocks such as Price-to-Earnings or Price-to-Book. However, it doesn't hurt to have another tool in the kit.
On a more interesting side-note, Wall Street analysts have definitely not read this book. It is amusing to note that analysts in the hey-day of the Internet boom touted stocks with PSRs in excess of 10x. A careful fundamental analysis would have resulted in concluding that the growth, margins, and balance sheets of these companies did not justify such high valuations. Nothing in the business models indicated superior performance on any dimension. Even if a business model was found to be superior, prudence would have dictated waiting for a "Glitch".