Let me clear up a few points.
If we have a disconnect here, the reason is that you've forgotten what you wrote in your own post. So, I'll quote you here to jog your memory:
Here are the revenue numbers for WIND and PTEC for the last five fiscal years.
WIND -- PTEC
66.47 -- 78.14
44.86 -- 51.97
32.78 -- 110.00
27.82 -- 66.58
25.17 -- 61.02
WIND's revenues have gone up 164% in four years versus 28% (6% ANNUALLY) for PTEC. In addition, over the longer term WIND has had a record of consistently increasing revenue and earnings while PTEC has been a roller coaster ride for both revenue and earnings.
Your logic is completely false, as I explained in my post. To quickly summarize, the revenues in a company that divested 2 divisions declined and the revenues in a company raising capital in an IPO, a secondary offering, and the acquisition rose. If a company issues 50% more shares, you should expect to a 50% increase in the assets (tangible + intangible) of the company and a 50% increase in profits. If margins remain constant, you should also see a 50% increase in revenues. Anything less means you're losing money.
Wind River had $25.053m in revenues in 1993 and there were 10.455m shares, or $2.40/share. Before the secondary offering and the stock split, revenues were $44m and there were 15.491m shares, or $2.84/share. The increase over the 3 year period is 18%, or 6% annually. This represents a slow growth rate and is substantially less than the 164% that you dreamed up. The company has a bright future, but the rear view mirror looks very grim.
As I stated before, though, it's profits that really matter. Wind River had good years in 1993 and 1996 when EPS was 0.16 and 0.35 and bad years in 1994 and 1995 when EPS was 0.02 and 0.17. Revenues and shares have grown consistently, but your assertion that earnings have also grown consistently is completely false.
Mark, I hope your short sales were not on the other side of these trades.
I have no idea how you got this idea. You refuse to read your own posts and you don't read mine, either. Please read my posts again carefully. You'll find that there's no reference to a short position because I've never shorted Wind River. In addition, my stock transactions are completely irrelevent to the substance of this discussion of valuation of intangibles (intellectual property, brand name, etc.) that you're so intent on avoiding.
While I am not a fan of share dilution it was a little difficult to get worked up about this secondary.
I don't know how you got this idea, either. I've repeatedly stated that selling overpriced stock was a brilliant move. Your seem to attribute quite a lot of false information to me that's merely a figment of your imagination.
Since you seem to be the only one aware of the shopping spree that WIND has been on please enlighten the rest of us with some facts like the names and prices of companies purchased.
OK, in my post, change "acquisitions" to "acquisition(s)". Are you happy now? Why do you work yourself up to such a tizzy over trivialities at the same time as you ignore the substance of my post and even the content of your own post? I described in abstract terms something that applies to any company, not just Wind River. The fact remains that the shares are greatly diluted and you didn't take it into account.
As I remember management expressed concern about this issue and said that they had spent $2 mil to buy stock during the recent price drop in order to have it available for future option exercises (another astute WIND management move).
There were 13.317m shares in 1994 and 15.491m shares in 1996 before the secondary offering. If not stock options, then how do you explain the dilution? Other secondary "offering(s)"? "Acquisition(s)"? Private stock "sale(s)" to other companies? The SEC only carries recent filings, so it's hard to figure out this info, but the big increase in share count is clearly undeniable, particularly for a company that made no acquisition(s) in the period.
Actually, you would've known if you had listened to the conference call that management was expressing concern because the cash position increased by only $2m in a quarter when they earned $2.9m. The bloated stock price that enabled the company to greatly swell the cash position is coming back to haunt them when they fulfill employee stock option obligations. The company is finding it much easier to strengthen itself selling stock than selling profitable products.
I'm glad to hear that this dilution policy has been discontinued. It's gratifying to see that management is finally making a show of faith in the future of the company. I was the first and only person on this thread to suggest buying back stock, so I don't know why so many people on this thread think I'm crazy. You guys probably think Ron Ablemann and Pauline Schuman are crazy, too. I sleep well when I fantasize that the rancor I caused on this thread in April was the motivation. All companies should be required to purchase the shares the minute the options are granted, rather than on the date the options are exercised or diluting the existing shares. It's too bad they paid 20 for the shares (100,000 shares for $2m) only a few months after they sold them for 18. On April 23, Joe Smith suggested that, "after costs it would be silly to buy back those shares now. That would be mismanagement."
I hope he has changed his mind now. |
