[ale] OT: corporate finance 101

[James P. Kinney III]

So from what I read of Chris Fowler and Chris Farris, it is as I
expected, SCAM!

Or just a religion. Sounds good, feels good, promises good things will 
come, but not based on a solid bed of irrefutable evidence. 

I know the stock values of privately held companies get set by an
auditor 
who digs through the books and bases the stock value on the financial 
status of the company at a point in time. Next year, it happens again.

But it does seem like publicly traded companies are very nebulous in
terms 
of stock valuation. Too much psycology and not enough math.

Ick! Maybe Scott Adams is not doing the world a favor by publishing more
ways companies can screw their customer, employees and interns.

But then, executive types don't read Dilbert, do they?

On Mon, 2002-01-21 at 20:49, Chris Fowler wrote:
> Many reasons.  I've worked for a few public companies and can say never in
> my life have I learned to scam like those guys.  I have a saying.
> 
> When you are a child you believe money grows on tress.
> You grow up and realize that is false.
> Then, you work for a public company.  You know somewhere there
> must be a damn tree with money growing on it!
> 
> This is especially true for companies who have little sales.
> 
> How do they do this.  Easy, fools that want to invest.  If you had a crazy
> brother that wanted to star his company you would give him say $100.00.  He
> would ask for $100.00 each week.  Sometime you ask. "When am I going to get
> my return?"
> When investors ask this, it is time to find another fool.
> 
> Stock Prices.  These could be used for many things.  Lets say you had $0 in
> the bank and you wanted to buy another company.  You in agreement with that
> company decide to give them 100,000 shares at a value of $40 per share.
> Before the deal is closed the price goes to $20.  Now you have to fork over
> 200,000 shares.  Or maybe the deal goes null and void.  I believe that stock
> is good for the economy but so many companies fail in 3 areas.
> 
> 1.  Management
> 2.  Innovation
> 3.  Sales
> 
> I believe they can fall in that order but someone correct me or add to the
> list.  When you are public your books become public knowledge.  When sales
> fall you it reflects in your quarterly statements.  Read some of a failing
> company.  Read the press releases you can sense the death or failure.
> Basically 2 and 3 are a bad cycle.  Without innovation no one buys.  Without
> sales you can't pay development costs.  You then spiral like a plane out of
> control until you crash.  So you try to recover.  You do the following.
> 
> 1.  Fire Management
> 2.  Hire New
> 
> You Hire New to pump faith into investors on the future of the company.
> 
> 3. Recruit investors
> 4. Pump out press releases that fluff your company
> 
> This will continue until you pull out of a spin or hit the ground.  Problem
> is there are fools wiling to invest.  Too many fools.  It is a slow and
> painful death for you and your employees but the company somehow manages to
> go on.  This is the way it is with many public companies that are in this
> environment.
> 
> How do you fix it?  SCAM!
> 
> Find any rule you can get around or break that makes those quarterly reports
> look good.  Hint,  reports are due 45 days after end of quarter.  If you
> invested in a company that released theirs on that last day they can only be
> 2 reasons.
> 
> 1.  Laziness (Unlikely)
> 2.  Loss of $$$
> 
> If a report looks good the faster it is released the better the stock price.
> You can basically be loosing money but if you can keep the price up, you can
> get investments.  Oh yea,  keep the business plans pumping out of the works.
> Create
> a new for each loss of investor.  If you like drama, become an office in a
> public company that is a failure.
> 
> Sometimes a company can't get investments.  If the price is too low they
> have to pump out major amounts of sales to pay bills, pay salaries.  Every
> time they do this it can dilute the shares owned by shareholders.  Not a
> nice thing.
> 
> Feed on this.  You need 2 elements to break rules or laws.
> 
> 1.  Opportunity
> 2.  Time
> 
> How to become a .com billionaire.
> 
> 1.  Find a dumb investor
> 2.  Build a pseudo company
> 3.  Market the hell out of vaporware
> 4.  IPO
> 5.  Wait till you bloackout time is over
> 6.  Sell your stock or live a nice lifestyle
> 7.  Bankrupt the company
> 
> Many did the above correctly.  It was too late for LinuxOne.
> 
> 
> Enron had both.
> 
> 
> -----Original Message-----
> From: James P. Kinney III [mailto:jkinney at localnetsolutions.com]
> Sent: Monday, January 21, 2002 8:29 PM
> To: Atlanta Linux User Group (E-mail)
> Subject: [ale] OT: corporate finance 101
> 
> 
> Why do companies panic when their stock price falls? They are not the
> ones selling it. Unless they are in IPO, or have a new release. The
> stock buyer pays the stock seller. The only time the company gets the
> money is when they are selling. Someone please enlighten me as it makes
> no sense.
> 
> I've been reading on the Enron mess and it stinks.
> --
> James P. Kinney III   \Changing the mobile computing world/
> President and COO      \          one Linux user         /
> Local Net Solutions,LLC \           at a time.          /
> 770-493-8244             \.___________________________./
> 
> GPG ID: 829C6CA7 James P. Kinney III (M.S. Physics)
> <jkinney at localnetsolutions.com>
> Fingerprint = 3C9E 6366 54FC A3FE BA4D 0659 6190 ADC3 829C 6CA7
> 
> 
> 
> 
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-- 
James P. Kinney III   \Changing the mobile computing world/
President and COO      \          one Linux user         /
Local Net Solutions,LLC \           at a time.          /
770-493-8244             \.___________________________./

GPG ID: 829C6CA7 James P. Kinney III (M.S. Physics)
<jkinney at localnetsolutions.com>
Fingerprint = 3C9E 6366 54FC A3FE BA4D 0659 6190 ADC3 829C 6CA7 



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