To me, buying stocks is a way of making money. I love to buy companies whose stock runs up far faster than their cashflows. Part of the fun of it is guessing when the damned thing will collapse to a more reasonable valuation. IMHO, any computer company with a PE of 100 must be carefully watched, especially when it is competing with proven performers like Microsoft and Intel.
IMO, any CEO who would eagerly pick fights with those two companies is suffering from delusions of grandeur, maybe even psychosis (especially if he likes to fly jet fighter planes as a hobby). I wish he would do it on his own credit card and not on ours.
Many of you seem to think that McNealy is some kind of plaster saint. I learned long ago not to fall in love with a stock or to worship businessmen. I like to buy and hold. I like to trust the managers of my money to be prudent, inventive and bold. I don't like them to be jerks. I think it is foolish to be unnecessarily combative like Balmer and McNealy.
I am an expert in business management. I have counselled top management in several businesses, including the biggest of its day and some of which have profitably survived my counseling. I know the strategic management literature and have taught it many years. I think Sun has been well-managed in the past and is an exciting and productive environment. I always use it as a case in my courses. I never use it as a church.
One of the reasons I don't sell out is obvious -- I think the company is sound and will continue to grow in profits and assets. I would love for my grandchild to inherit my SUNW and be very rich. For that to happen, people must expect for many years that a 100 PE is sustainable, which it isn't. I have constructed what I consider a reasonable system of hedges using LEAPS and stock and GTC limit orders and stops that will prevent me from taking large losses even if SUNW drops by 50 per cent or more (which I consider quite likely, almost certain, in the next two years). It takes little attention, and if things go well (which I fervently wish) I will share partially in the upside (which I couldn't if I got out). If SUNW is cut off at the knees, I will be able continue to hold 80 per cent or more of my shares for the long haul, make some tax losses, and still have my sunwealth increase.
IMO there is little relation whatsoever any more between the value of a corporation and the price of its stock. I would rather own GM than Amazon.com. I think I could manage GM to make even more money, but there is little I can do about the stock which is terribly boring. I would demand a huge salary and profit-based bonuses to manage GM, but would not worry much about the options. Sun is somewhere in between. It makes a small, decent profit, pays no dividends, its revenues increase at a less than exhilaring pace, and its stock rises rapidly mostly on hype (as on this thread) and unjustifiable expectations. I am sure the company will continue to be successful and lots of fun. I am not so sure about the stock. |
