I'm only half-kidding.
Corporate mentality has changed over the years. In the past, a great company was one which increased dividends every year.
People then realized that they were getting raped over dividend payments (taxed twice and taxed at income levels) so great companies then became companies like MSFT, CSCO, and INTC -- companies which increased revenues and earnings every year but almost never paid dividends. If you wanted cash profit, you had to sell stock, which is fine because long term capital gains is only 20% or half of the 39.6% max (plus state tax) income tax. The company also got to retain earnings for strategic acquisitions and is not hindered by strict dividend payments.
Then the internet craze hit. Profits? What are those? Long-term viability? Why bother when you can get in and out for a quick few hundred million? Unique, marketable, and profitable technology? Who are we kidding? The MBAs figured out that building the next MSFT, CSCO or INTC is not realistic. What is realistic is building the next skyrocketing (and then tanking) stock.
How do you do that? With the "Mushroom" philosophy of operations and investor relations: Keep them in the dark, feed them manure, and watch them grow. You are purposely vague and cryptic about your technology and intentions. Why? Because the unknown and mysterious is worth more than the known, especially when people find out that 99% of the known out there are not viable in the long term. Anyone would trade $100 for what's behind Monty Hall's Door #2, even if it's only a bucket of pig turd. Many would even trade $1000. Some trade $1000 for that bucket and then claim it is really full of gold and only has pig turd on the top. The internet is here to stay, but most of these companies are not.
The bottomline is that many of these companies have one feasible product: their stock. What could CUST possibly create so quickly that could be so valuable in a crowded field? It's behind Door #2. The fact of the matter is that sooner or later, companies like CUST will have to open Door #2, and that's usually when that bucket of pig turd hits the fan. |
