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Technology Stocks : Wind River going up, up, up!
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To: Allen Benn who wrote (3430)7/20/1998 10:51:00 AM
From: Mark Brophy   of 10309
 
Re: Cash hoard and perfect execution

Frankly, I don't know if WIND bestows too little or too many options on employees, since I'm not intimately knowledgeable of executive pay scales in Silicon Valley. However, when Dick Kraber's options package is dissected and judged unilaterally to be excessive, I keep thinking: "WIND has over $200 million in cash and is executing to perfection. That's worth a great deal more than the numbers bandied about on the thread."

The company also has a $140m liability from the bond offering, so the $200m hoard is reduced to $60m. They raised $50m in the 1996 secondary offering, so only $10m could've come from profitable operations. Another $30m was raised in the 1994 IPO, so they're $20m in the hole from operations. Add in another $56m for assets other than cash such as land and buildings, and the total excess cash flow accumulated in the last 14 years is $36m (not including capital invested before the IPO).

Is $36m of profit in 14 years "perfect execution" when you take into account the massive dilution from stock options and pooling acquisitions in the amount of hundreds of millions of dollars? It seems like Pirah Naman's suggestion to examine the cash flow statements would be more useful than reading earnings statements that grossly overstate earnings.
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