First of all, I think it is important for AFFI executives to understand that stock prices tend to be self-reinforcing. What I mean is a companies stock price actually effects the companies fundamentals. For instance, let's take ISP(A). ISP A is selling for $5 a share. It begins by buying subscribers from another smaller ISP or signing a hosting deal or expanding in a new geographic area.
This positively reinforces the stock price up to $12. This higher stock price can now be used as currency to buy other smaller private ISP's or new subscribers. ISP A could also now tap the secondary market for additional funds, let's say they sell an additional 3 million shares for net proceeds of $45 million.
They can use these funds to hire new people, further expansion, and lure executive talent with stock options. The funds could also be used to *buy revenue* through marketing alliances, tie ups etc. You can begin to see how all these events can cause a companies fundamentals to improve and thus cause the stock price to appreciate.
As this self-reinforcing trend continues and the stock price makes its way up it begins to accelerate. What if ISP A stock price is now at $50 a share. A 2 million share secondary now nets the company $100 million. This is serious cash.
What does all this have to do with AFFI. It's executives who fully understand this self-reinforcing process who generate significant wealth for themselves and their shareholders.
It begins by taking an object at rest and moving it into a momentum phase, this is the hardest phase to initiate. Their are several thousand small, medium and large banks that need help in migrating their business to the net this is the place to start.
Internet firms need to evolve at a hyperactive rate. It just takes a few singles to get there.
In terms of the patents. Intellectual property is definitely of strategic importance, it's just hard to quantify its tangibility. At some later point in capitalization they may find it advantageous to enforce them. Priceline.com is having this problem right now, someone else has patents on their pricing mechanism or process.(Alleged of course)
Good to talk with you
Steve |
