<<Expected or not, when it happened, and revenue and earnings fell as a result, no amount of "spin" could have held up the stock price.>>
Wrong. Factually incorrect. Many examples of internet companies and non-internet companies that did not fall as a result of releasing WORSE than expected results.
<<When business conditions change for profitable comapnies, no amount of spin can keep inflated prices up.>>
Wrong. You roll with the punches ? the business conditions changed, and we took a temporary hit, but we positioned ourselves better for the future blah, blah, blah. Ex: INTC did this in the earnings before the last when it came below expectations ? stock rallied. Many other examples. But what it needs is a CEO articulating a vision?
<<Come out of the "hype" world for a minute>>
Why should I? You call it ?hype? ? I might call it salesmanship, or leadership. Doesn?t matter what the name is. What you fail to grasp, and I have tried to explain in tedious detail, is that what you call ?hype?, is not always a pejorative ? it can have real world business consequences. There are many examples of visionary CEOs, excellent salesmen and leaders who managed to ?inflate? their shareprice and use it to build a profitable empire. The key was they were able to do this, and the street bought their story, because it made sense ? KP is clearly not in that class (quite the opposite). Think of stock price management ?pumping?, ?hype? etc., as simply increasing your capital leverage ? which increases your business options.
<<NITE is not a net stock.>>
Gee, I see it lumped together with net stocks all the time. Anyway, it doesn?t matter what you call it ? ?extravagant? valuation can occur in any internet-related stock, including hardware-builders like CSCO, or completely not connected to net stocks.
<<Stocks like MSFT, INTC, CSCO, get much more leeway in this area than a NITE would because of their long histories of earnings consistency and dominant industry positions>>
Not true. Many new companies, internets and otherwise are given leeway because of the ?story? they manage to peddle. If the story is a fake ? they will burst like a bubble. If the story is true ? they?ll build an empire. AMZN may burst, while other nets might fulfill the promise.
<<Different business, different set of expectations. Real numbers to meet.>> in answer to why AMZN can sustain their valuation, and NITE cannot.
Cop-out. And wrong. Many other e-tailers (same business, no ?real #s to meet?) cannot sustain valuations like AMZN can ? so it is NOT the question of business, expectations, #s etc. OF COURSE AMZN is a different business ? but the biggest difference is that Bezos has it, and KP doesn?t (selling their vision).
<<Hard to measure value relative to earnings when there are none.>> <<Once a company jumps to being profitable, what other measures can there be?>>
MANY internet stocks have p/e, and are profitable (YHOO, AOL etc.), with the p/e still in the 100?s. Even a less stellar p/e like SCH ? which has slowing growth and a far lower profit margin, sports a p/e higher than NITE. Anyhow, this is a bunch of nonsense ? it simply is not true that all ?profitable? companies are held to conventional valuations, and that only with ?losses? can you get outrageous valuations. Key: you have to have a story, and sell your vision to investors.
<<Non-existant stuff, yet.>>
How many nets have ?existant stuff?, and how many companies that sell their FUTURE vision *already* have ?existant stuff??? The very definition of a story stock, is stuff is in the FUTURE. Of course it doesn?t exist as yet. It is KP?s job to sell the FUTURE.
<<All this rhetoric aside, do your really think "promises" about future growth potential carry more weight than a missed earnings estimate?>>
Sure as hell, I do. And there are countless examples of the market willing to accept temporary setbacks in a business that is evolving toward greater success down the road. The market is a FUTURE discounting mechanism. But this requires a CEO with PR skills on par with Bezos. KP is not that man.
<<What makes you think market making is an "eruptive" business model? NITE can't really remake itself on a whimm like an AMZN can to re-fuel a fading candle.>>
Who SAYS?? What a complete failure of imagination!!! Are you aware of MER?s plans for their online site? Do you realize that they plan on having e-tailing, car insurance and many other services? They already have a credit card service etc, etc, etc, Boy are they glad you are not their CEO, or they?d be still stuck as an old line traditional brokerage ?what credit cards??? We are not a bank!? NITE can do any number of things ? here you are limited only by your imagination ? perhaps KP is not dynamic enough! Perhaps they should open a brokerage business, or do a thousand other things. I can so well picture Bezos being told the same thing: books are sold in stores. There goes the whole business ? but Bezos had imagination, vision, and sold it! All he started with was books on line ? as did many other wannabe booksonline.coms ? look what Bezos has expanded to! NITE is, should be, and can be, more than ?just another MM?, just as AMZN is more than ?just a bookseller?. With your attitude innovations would be dead! You really blew up on this one, Gary!
Anyhow, this is getting rather silly ? the quality of your latest arguments is deteriorating. I made my case ? if you don?t see it, I can?t do better, my fault. Everyone must make up their own mind as to where they stand in regard to the issues. So, I?ll rest my case, and let you have the last word.
Good luck!
Morgan |
