Herewith two recent commentaries on that mainstay of stock valuation, the analyst. Both are from the (computer) tech world, but their message is universal.
Adam Lashinsky is easily my favorite writer at The Street.com. I think he's sharp, independent, and reform-minded.
Doc
____________________
thestreet.com
Commentary : SiliconStreet.com
Research Doesn't Always Sell
By Adam Lashinsky
Silicon Valley Columnist
3/17/00 7:00 AM ET
NEW YORK -- Scott Sipprelle, once a big-time investment banker with Morgan Stanley, has learned at least one lesson in the two years since he set up his own firm, Midtown Research Group: Research doesn't sell.
This realization is of more than passing interest to students of the brokerage world who are trying to understand why the Chinese Wall has ceased to separate investment bankers from their research analysts. In other words, Wall Street research essentially is a prop for banking, the latter being far more remunerative than the former.
<snip>
Most revealing are Sipprelle's observations about the IPO roadshow. Fund managers who attend scores of meetings don't have time to absorb each story. Sometimes, he notes acerbically, all they carry away is an impression: That the room was crowded, say. "A good roadshow never has enough seats," he says -- dead seriously.
<snip>
_____________________________
Charles H. Ferguson has written an excellent tell-all (not to mention get-even) about founding an Internet startup, eventually selling it to Microsoft, where its product became "Front Page". The book has received good reviews. Besides a strong tech/management background, Ferguson has a Ph.D. from MIT in political science, and has done heavy government and industry consulting.
----------
Charles H. Ferguson
High Stakes, No Prisoners
Times Business - Random House 1999
--------
THE ANALYSTS, p. 131
Any remaining illusions I harbored about the workings of my industry were dispelled by our meetings with analysts, market research firms, and industry newsletters...
You always see gushing analyst white papers as part of the press package when a new product comes out. We needed one too. Well, it turns out that you buy them. We negotiated with several firms. Aberdeen wanted $16,000, preferably in stock, but Seybold would do it for $15,000 in cash. So we used Seybold, who sent us a nice man who wrote exactly what we told him to. I didn't like it, but everyone made it very clear that this was standard practice, that it was necessary for us, and that I should keep my mouth shut and stay out of the way. So I did. |
