Ed, while I certainly can't dispute the importance of "perception" to the market, I can't agree that perception equals reality, or that it is management's job to manipulate market perceptions if that means compromising attention to the actual business.
Some guru has said that over the short term, the market is a popularity contest, but over the long term its a discounting mechanism. I think that's a pretty good observation. The market's manic-depressive execesses (perceptions?) give us some pretty good opportunities to buy and sell, but that's not what will drive the stock price over the long haul. Earnings, and expectations of future earnings are the name of the game. I'd rather that Mikey et. al. focus on the task of managing the business, and growing those earnings, because that's what will drive the stock price. Its also what will produce that "pizzaz" that we both want.
But no fake, window-dressing pizzaz please! <g>
When management takes its eye off the ball in order to manipulate the stock price, they sacrifice their integrity as well as put the business at risk. God knows there are plenty of companies that do it, but I'm not invested in any of them. (I hope.)
I got into Dell when its PE was in the single digits. February '96. The market hated Dell then. Then it decided it loved Dell, and caused the huge expansion in PE that we've all enjoyed. Now the market's luke-warm about Dell, and the price has languished accordingly. I never called Dell a value play. But I wouldn't call it overvalued either. But I am confident that the earnings will continue to come, and that the stock price will respond soon enough.
Finally, with regard to expectations and market perception, my own opinion is that there is plenty of good news there for people who are willing to see it. My take on the conference call and the numbers is that there is plenty of pizzaz in Dell right here, right now. We can nit-pick over a few metrics, but overall I would think that any impartial observer would call it an extremely positive quarter, and that the company is poised for continued big success. They are getting the word out, but they can't control how the market chooses to react to it.
(Besides, the financial press and the analysts have their own agendas don't they? They're in business too, and they have their own business imperatives that they need to serve.)
FWIW,
Andy
PS: I certainly do wish I had gotten into QCOM a year ago. |
