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Technology Stocks : Wind River going up, up, up!
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To: Mitchell Jones who wrote (2846)3/5/1998 1:16:00 PM
From: Mark Brophy  Read Replies (2) of 10309
 
Your on the wrong track.

The sad reality is that the company has been skimping on R&D for the past 3 years in order to maximize reported profits. If the company were honest, they'd amortize the $14m over the past 3 years and admit that they've been growing operating profits at 30% rather than 45%. Taking the hit all at once is the best course because investors will forget about it a year from now and the company can continue pretending it's growing 45%.

This is a very common accounting gimmick used most prominently by IBM and 3Com. Even though they aren't growing shareholder value, the stocks keep going up because everyone forgets the periodic "one-time" write-offs.

The reason Wind River stock is going nowhere is because the investment banks are no longer hyping the stock. The company got all the money it needs from the convertible bond, so the banks have other fish to fry now.
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