I mentioned in an earlier post
Message 11689892
my thoughts regarding a WS cabal that controls a stocks short term price. Consider the "typical" price of three well known tech favorites: CSCO, INTC and MSFT. There is a glaring discrepancy in the PE's of these three -- INTC is consistently awarded only a fraction of the PE of either of the other two. Now certainly part of this discrepancy occurs because of the Intel's growth rate and the cyclicality of the semi business.
But I don't believe that's all of it. We all know about Microsoft's typical cc's, where there they say "Well sure we beat earnings this quarter, but next quarter there are all kinds of problems!" The result is earnings expectations and the stock's price are relatively depressed. Thus the put premiums are elevated and we all know who sells the most MSFT puts.
Cisco's use of its elevated PE stock in lieu of an R&D dept. is legendary. While the CSCO PE is usually lofty, there are periodic precipitous downdrafts. When these occur, rarely if ever does Cisco offer any corrective guidance. Thus the "paranoid" suspect that the CSCO cabal periodically runs the stock down with the company's acquiescence if not blessing. Cisco's part in this charade is to never surprise the cabal, just play along and be rewarded with a stock PE that solves any R&D problems.
In this view, both Cisco and Microsoft have in house WS expertise that allow them to play the cabal game to their considerable advantage. Intel for whatever reason doesn't seem to play. Not only will they frequently miss their quarter but in the past I have seen them come out and actually contradict Kurlak when he was negative on the stock. When this would happen, the stock's price would remain up. I learned that such an occurrence was a "selling opportunity", since the stock soon would move as the cabal desired.
With this perspective, we have two companies that cooperate with their respective cabals and are rewarded with a high PE. Also, we have another company that apparently doesn't cooperate (or a least not to the same degree) and has a much lower PE. Now what about Q?
It has been my belief that when it comes to WS, Q doesn't have a clue! The two most recent examples of this are:
1) This summer's secondary to raise 1GB (Giga buck) was handled ineptly.
2) On a certain Monday in September (known as Lindy's Lament), when without a public explanation, they fail to show up at an analyst conference. Can you imagine Cisco doing that?
Currently, in the midst of a tornado, Q has other "fish to fry". Eventually though after this hypergrowth stage, the PE of Q (and hence the price of our shares) may well depend upon Q acquiring some WS savvy.
Comments welcome.
lurking ...
lurqer |
