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To: KeepItSimple who wrote (26278)	9/19/1999 8:29:00 AM
From: re3	Respond to of 99985

well, loads of flaws here... 1) msft had to sell shares to raise capital in the earlier days.. 2) internet execs should rent something in the valley...with the $ they take out of a biz, they can live like kings and queens anywhere else...why hang around...lots of warm places to retire to 3) you know the corner shop gets valued at maybe 2 x earnings, because after you buy it you have to work there...and so many get squeezed out anyway..many bookshops are getting whacked because of amzn and bn, etc...these are not monopolies or international marketers and dont deserve more than 2 x earnings... 4) some companies may grow into valuations, some will not... that is all for now ike

To: KeepItSimple who wrote (26278)	9/19/1999 9:58:00 AM
From: Fun-da-Mental#1	Respond to of 99985

Thank you. You've got guts to actually mention dividends. I'm scared to say it for fear of being considered a crackpot, but I agree with your post 100%. Fun-da-Mental

To: KeepItSimple who wrote (26278)	9/19/1999 10:32:00 AM
From: dclapp	Respond to of 99985

KIS, That's the best post of yours that I've ever read. But remember, flattery isn't necessarily encouragement <g> doug

To: KeepItSimple who wrote (26278)	9/19/1999 10:38:00 AM
From: Fun-da-Mental#1	Read Replies (5) \| Respond to of 99985

OT - Why doesn't Microsoft pay dividends? They have about 5 billion shares issued and they earned about $8 billion in the last year. So they could pay a dollar a share yearly dividend if they wanted to. But they don't, and they have so much money lying around they have to shovel it out the back door. They give billions to charity, which is nice, but didn't it ever occur to them to pay a dividend? I guess if they paid a dollar a year dividend, that would still only be a 1% yield and it would emphasize how overvalued the stock is, whereas if they never pay a dividend at all then they can avoid the issue. Fun-da-Mental

To: KeepItSimple who wrote (26278)	9/19/1999 1:21:00 PM
From: Kip518	Respond to of 99985

The product or services these companies claim to produce is irrelevent. The only thing that matters is selling stock..... KIS -- thanks for a post that's a keeper. friends & family can play too... nytimes.com

To: KeepItSimple who wrote (26278)	9/19/1999 3:47:00 PM
From: Berney	Respond to of 99985

KIS, I guess I lost your argument. Dividends are but one course of action that a company can choose to do with its earnings. There are three others, and the appropriate course of action depends on the company and its "maturity". Let's look at investment math As an example, let's consider a real live nameless company (you might guess who it is). The company's stock is selling at about $80 per share, it has a current PE of 40, a historical (previous 6 years) average PE ratio of 20, and a projected growth rate of EPS of 20%. Its EPS for 1998 were just under $2. As always, there is much controversy of whether the company can maintain its growth rate. If the $2 is compounded for 10 years, the earnings at the end of year 10 would be $12.38. At a PE ratio of 40, the stock valuation would be $495, or a compounded investment return of 22.5%. However, before considering the investment, the prudent investor determines that it would be more reasonable to utilize the historical PE ratio of 20. In other words, there would be a severe contraction in the value that the market assigns to the earnings. At the end of 10 years, we have the same $12.38 in earnings, and a market value of $248, or a 13.4% investment return. This hardly represents the end of the world. Now, I believe that at the current valuation, the stock represents a bloated whale and I've got a harpoon ready. I really do look forward to the Market killing the price, which it does on a regular basis, to provide an even more lucrative entry point. Nevertheless, investment math is really not that difficult. While I care very much what a company does with its earnings, I could care less whether they pay a dividend. Berney