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Technology Stocks : CRUS: Can they restore investors' confidence?
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To: ted quinn who wrote (7)1/25/1997 3:34:00 PM
From: johnd   of 23
 
Ted:

You are right again.

This is actually a CRUS strategy - high R&D leading to lower profits
that leads to lower stock prices. The idea behind this is to create
value for short sellers. But there is also another reason.

A most recent study from Harvard University shows that companies who
keep their stock prices low, have their employees watching their stock
prices less and thus leading to higher productivity. The challenge
for CRUS management going forward is to keep spending more and more
in R&D as percent of revenue so that profits are lower and lower and
share prices keep falling. They can do this two ways. - One is to
work on lower revenue [AAPL, NOVL, DEC model]. The other is to just
keep spending more and more on wasteful R&D. As you observed, Cirrus
is hedging by doig both, to get accelerated results.

Ted, you contiue to show your genius. Keep it up

johnd
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