Yes, my first position belongs to the '10 times revenue club' ... but is not Facebook

As my beloved readers know well, I have a 'value-soul' but it is not rare to find in my portfolio a good number of 'growthy' stocks, whose valuation are, well, all but cheap.
One of those stock is Intuitive Surgical, Inc. (ISRG) and it is now my first position (less than 15%).
The '10 times revenue club' I mention in the title is a reference (maybe, a tribute) to a great post written by William Gurley, general partner at Benchmark Capital, where he warns of the risk of re-playing the mentality in vogue during the 'dot.com' bubble in the late 90s: "(...) Calculating or qualifying potential valuation using the simplistic and crude tool of a revenue multiple (also known as the price/revenue or price/sales ratio) was quite trendy back during the Internet bubble of the late 1990s. Perhaps it is not peculiar that our good friend the price/revenue ratio is back in vogue. But investors and analysts beware; this is a remarkably dangerous technique, because all revenues are not created equal".
Just to contextualize the numbers, I have listed below the average values (here I have used ev/sales in order to correct the numerator, p, or market cap, for the net cash or debt position of each company) for sectors (GICS) represented in the S&P 500:

Consumer Discretionary 1.7, Consumer Staples 1.8, Energy 2.9, Financials 5.0, Health Care 2.3, Industrials 1.6, Information Technology 2.7, Materials 1.8, Telecommunication Services 2.3, Utilities 2.2 --> average value S&P 500 = 2.6

So, 'our' ISRG, with its 9.7, is a stock with an ev/sales of 9.7, more than 4 times the average of its sector (health care) and one of the most expensive stock in the entire S&P 500.


But now, before talking about valuation and explain why and if ISRG 'deserve' this kind of valuation, I'll go straight on the recently published 10-K that cover the fiscal year ended December 31, 2011, where I'll detail the most important lines in order to understand the business.