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Technology Stocks : Wind River going up, up, up!
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To: Mark Brophy who wrote (904)4/22/1997 12:24:00 PM
From: Joe Smith   of 10309
 
Mark-
It is impossible to say for a FACT whether it is over or undervalued at any given time. This is a temporal thing, it cannot be pinned down like the interest rate of a T-bond. ALl we can do is share evidence with each other.
I will not argue that WIND made a large follow-on offering of stock in July. What I was taking issue with was your statement unsupported by facts that they are wasting this money on acquisitions, etc. Although my statement about 0 acquisitions was wrong, the RST deal was a small one whereby WIND acquired their Israeli distributor, barely a blip on my mental radar. This is not where the millions of dollars of cash has gone. Since we don't know where it has gone, isn't it possible, even likely, that it IS being spent inside the company? I doubt that they raised all that cash becasue they thought the price of the stock was high. The transaction costs are huge. They probably needed it.
Also I take issue with your statement that "Since the company sold shares at 18 last July and the price is 19 5/8 today, the company either believes
the shares are overpriced or the company is worth at least $46m more than last July. That seems
unlikely, since they've only earned $7.8m since last July."
According to this logic, any time a stock goes up and earnings do not compensate for the gain, it must be overvalued. Perrhaps WIND is worth $46 m more based on the success of Tornado and the failure of its main competitor INTS.
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