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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: ralessipvh who wrote (24682)	5/13/2000 5:29:00 PM
From: Mike Buckley	Respond to of 54805

Once these companies went public, the float doubled or tripled with every stock split. The public kept bidding theirshares higher and higher, forcing management to split the shares and create a float large enough to cripple the company's earnings potential. That's the kind of financial reporting in the media that is aggregiously misleading to the novices and an embarrassment to the experienced investors. Nothing forced management to do anything. Management had the choice of not splitting the stocks. Most important, the size of the float and the size of the outstanding shares has nothing to do with a company's ability to earn dollars. Where the author gets this stuff is beyond me. For that matter, hindsight has taught me that when a slew of companies DON'T split their stock at prices of $200 and above it probably means they think the market and/or their sector is way overvalued. Otherwise, they'd be happy to split. For these companies, float will prove crucial to valuation. Many Internet companies have far too many shares outstanding already to earn enough money to justify their current stock prices. Again, the author and the editor should be embarrassed that such nonsense got published. That statement suggests that we should use the number of outstanding shares or the float as a basis for stock valuation, when everyone knows we should use the market capitalization regardless how much it's divided by the number of shares. Apparently the author forgot that an un-split stock has higher EPS along with a higher price and that a split stock has lower EPS along with a lower price. Earnings and price relative to the number of shares are inextricably linked. --Mike Buckley

To: ralessipvh who wrote (24682)	5/14/2000 4:59:00 AM
From: Bruce Brown	Respond to of 54805

RE: Ariba... That was a very interesting article indeed - especially coming from an analyst. I think I know which side of the buy or sell Mr. Vick is coming from. <ggg> Even though the i2 link I provided yesterday led to the Ariba Cash King review by a fellow Fool, allow me to post that direct link to a review of Ariba's Q2 balance sheet: boards.fool.com This company is so early in the technology adoption life cycle it is a given that the risk is very high. Obviously plenty of 'vision' is priced into the stock at $67 a share, let alone when it was trading at $183 a share. I won't argue with the aggressive risk involved at this point. If we view Ariba as a strict application software vendor, then buying in the bowling alley is the suggested prudent thing to do if playing the gorilla game of Ariba, Commerce One and Oracle's Internet based procurement solutions. Since the chasm really has yet to be crossed in terms of pure confirmation, then investment at this time as a strict software application vendor would be premature. However, applying the Internet based exchange model introduces an element in the business model that may or may not prove to be part Godzilla and caused me to be an early investor. The risk is high, but I understand that risk. It's not the first risk I have taken and the investment resides in the 5% - 10% portion of my portfolio labeled 'speculation'. I would argue with the criteria and comparisons that Mr. Vick was using in his article. If he was able to play the sell side from the $180 range down to the $60 range, then my hats are off to him because his return is far better than mine to date. If the chasm is firmly crossed and the technology adoption life cycle of Internet based procurement takes off, then my hopes are that the risk I have in companies like Ariba, Oracle, Aspect and i2 as solution providers for that life cycle will one day better Mr. Vick's assessment. BB