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Technology Stocks : Creative Labs (CREAF)
CREAF 0.550+17.0%Jan 30 9:30 AM EST
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To: Fred Fahmy who wrote (13244)1/6/1999 10:35:00 AM
From: Dennis G.  Read Replies (2) of 13925
 
Good post Fred. I agree with everything except the last statement. I don't think they are clueless how to get fair value. I think Sim knows perfectly well how to do it and he could do it today if he wanted. That's a no-brainer. I think he is deliberately depressing the price of his own stock with his policy of refusal to communicate. He is obviously not stupid. Sim knows perfectly well that this is Wall Street's justified response to that policy.

I do not believe it is the sector or Asia or anything else that is really depressing the stock price. Right now DIMD, with their horrible track record, is selling for TWICE the forward multiple that CREAF has. Why? Because even though their record sucks, they have at least communicated their vision of where they want to be in the future. So Wall Street has information on which to assess the risk in the stock. CREAF refuses to do this. So Wall Street must naturally assume the worst that they have no future and awards them that value.

As long as Sim continues this policy, the stock price will suck, dividend or no dividend. But if by some miracle he decided to start communicating, the street would respond with a better price.

Dennis
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