What is an open source company really worth?

Certainly a home worth $500,000 last year is worth less now. Certainly a stock worth $100/share last week is worth less now.

As to tomorrow I take the advice former Fed chair Paul Volcker once gave a lady asking for stock market advice. "Madam, prices will fluctuate."

Matt Asay and Savio Rodriguez have been looking at recent open source merger deals, with Matt concluding that basing a price on a multiple of booked revenue sounds nice.

Then he notes none of that explains Xensource getting $500 million.

What about growth? Yes, people will pay for growth, in a growing market. People will also pay for location on a technology map. I've seen them pay for virtual location on a virtual map, when they're feeling greedy.

Then there is fear. Fear makes almost everything worthless. Did you notice how that happened during the dot-bomb early this decade? Everything was buried, and most of it stayed buried.

My own theory is based on cycles of boom, bust and growth. People will make up excuses to pay anything when there's a boom on. They will pay nothing when a bust is on. It's only when we get beyond both that we find out the truth.

It's possible that this week's ongoing market panic will cause a bust cycle, in both open source and Web stocks generally. So I look to booming stocks, like Apple, to time our location in the open source boom-bust cycle.

When the leaders catch a cold the laggards catch pneumonia. After the disease has run its course we'll finally get to the truth.