Hi Sharck,
You make a very valid point about the vulture capital culture. However, from the perspective of the insider, it surely must be tempting to get the backing of a Goldman-Sachs or a Morgan, Stanley in a mezzanine round of financing. Since no one is at all interested in simply building a profitable business based on innovation in the Fiber Optic Component sector, prefering the create wealth via the public markets first of all, it stands to reason that the game that Kalkoven & Cie. must play is to get the technology to a viable stage and bring in the big underwriter/VCs at the latest possible point in the process of popping for the IPO. The play? Keep that percentage to a minimum, but don't forget which side the bread is buttered on. :) As I see it, all the serious wealth is created by transforming the avarice of the public investor, frothing at the prospects, into the concentrated hands of the insiders.
Re: CSCO recently posted a huge billboard facing one of NTs facilities targeting their engineers. Last summer, Larry Ellison commissioned a "Tastee Freeze" type ice cream truck, which he adorned with the Oracle logo and gave away free goodies to Siebel employees just across the street from SBL headquarters. I got to hand it to Ellison, sparing us visual pollution of an outdoor billboard, AND providing sweet treats was a real stroke of sublimity. Hehe. Nokia recently built a new development campus in north San Diego. I'm looking forward to the advertising/shmoozing campaign to lure QCOM inginerds up Route 15 to the new campus.
Re: Though "options" may be losing clout in the dot com world, they are certainly still very effective draw in the FO world as the pay back is still deemed a sure thing at IPO.
Didn't Santayana write about this? FO is the most over-hyped up-on-stilts sector of the market today. Ridiculous valuations, IMHO. Today, you can buy INTC at a P/E of 22.
SCMR? 1,315. FNSR? 1,535. GLW? 148. And how in the world can we value CORV at the same level as GM? My biggest concern here is that there is such a plethora of start-ups in an industry that has yet to be profitable in aggregate that there is no way in the world that this bubble can be sustained. To put it another way, Wall Street is valuing the FO sector at about $1,000 for every dollar the industry has ever earned! While I agree with Keynes that "markets can remain irrational longer than you can remain solvent," I also think that the world will inevitably and eventually return the FO sector back to some semblance of normal investment interest. If I were to try to identify the one sector of the market that is caught in Tulipmania today, FO is it. :)
That's my story and I'm stickin' to it, Ray |
