Wind River going up, up, up! Message Board

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Technology Stocks : Wind River going up, up, up!

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To: Carpe per Diem who wrote (8726)	10/28/2000 4:01:08 AM
From: saukriver	Read Replies (1) of 10309

Of course hindsight is 20/20...I'm sure Microsoft wouldn't have made those investments if they thought they wouldn't add shareholder value..to imply it was to satisfy Bill's ego [empire building] is ridiculous. Not necessarily Gates' ego at all. It is the ego of the the people at Microsoft who have wanted to build fiefdoms. My guess is that circa 1996 success at Microsoft was measured increasingly by how many people you were managing, which tilted the incentives heavily toward acquisitions. >>>>>"Fiddlers comment in the Forbes article could be taken as saying nothing more than that he has no goal of growing for growth's sake. That is entirely in line with the interest of shareholders." ?? Maybe for you, but not me...shareholder value is increased by nothing more than growth in earnings driven by growth in sales Utterly wrong. The goal is to increase earnings per share. Sheer "Growth in earnings" and "growth in sales" should not be the SH's objective at all. (It may be the goal of empire builders at a Lucent, AT&T, Microsoft, etc. ) But sheer size of earnings is just silly if it is diluted over a larger and larger pool of shares. The focus for me is increasing earnings per share. I will let you have the company that increases its earnings by $100B with 200B shares outstanding ($0.50 per share) if you let me take the company that increases its earnings by $10B with 1B shares outstanding ($10 per share). My suggestion is that Microsoft fell prey to the need of managers of a big company to go on an acquisition binge. Those that managed larger chunks were rewarded with more stock options. Being smart, they learned that acquiring more gave them more people to manage and great stock option awards. As an institution, Microsoft the peed money away on the idiotic $5B AT&T investment, the stupid Web-TV drive, the Expedia nonsense, the vaunted "cable properties," much of MSN, etc. etc. It all made Microsoft bigger. Taking the same pile of dough and using it to reacquire MSFT shares would have increased earnings per share (by reducing the number of shares out there). These ideas aren't novel. It is part of the "Innovator's Dilemma." Establish companies can get too comfortable. I simply suggest that Fiddler--by saying that his goal is not necessarily to be "as big as Microsoft"--is simply being smart. Fiddler said it. You slashed him for saying it. I think your critique is misguided. There is nothing OT about saying that the Chair of WRS is correct dismissing growth for growth's sake. Now, let's leave it at that.

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