Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Oracle Corporation (ORCL) -- Ignore unavailable to you. Want to Upgrade?

To: hueyone who wrote (17742)	1/6/2003 3:29:56 AM
From: Hardly B. Solipsist	Read Replies (1) \| Respond to of 19079

I must be confused. On the one hand you are saying that the performance of ORCL at building wealth is subpar, but the stock-price performance is above par. Yet the calculation of the wealth building just mentions the stock price. Does that mean that you are computing the wealth generated by the company in terms of the stock price? The only way that I've ever been able to make any sense of "what a company is worth" is in terms of the standard discounted dividends and long-term net asset values, and any high tech company has no net assets that are worth much long-term, and I can't think of any that pay dividends, either. So ultimately I gave up and invested on the optimistic premise that I wasn't the greatest fool in the game. On the other hand, companies like ORCL do generate a great deal of real wealth, in the sense that by their existence they create things that make civilization work, and they also create a substantial amount of human wealth (just look at the startups formed by ex-ORCL engineers and the companies run by ex-ORCL executives). So while I agree that the sort of analysis that you seemed to be talking about bring out important details about a company, I also think that there is something more going on at companies like ORCL, and that something doesn't seem to me to be well understood by economics...

To: hueyone who wrote (17742)	1/6/2003 1:40:39 PM
From: Lizzie Tudor	Respond to of 19079

I seriously doubt you can make a case that companies have performed better for shareholders on average where the executives have been granted massive stock options. I was trying to make a case that companies perform better when executives own more of the company than is typical. In other words some key executive or set of executives is free to do what they want with regards to paying people and other incentives vs. some guidelines that VCs come up with. I'm not sure how to reasearch this. I know Larry and Tom own so much of their respective companies they cut great deals for engineers early on that weren't possible in the startup companies I worked for- my startup companies also failed. Another company that has huge insider ownership is broadcom in the chip biz. Lets see how that one does. BTW I agree with you that there is likely a problem at the top with stock options, and oracle might be a poster child for that now. Oracle doesn't treat its people well, imo and their relentless outsourcing to india and the third world might wreak major damage to this industry later on, we'll have to see. Imo Oracle's unwillingness to incent key team lead positions with stock options and better pay in the applications area is costing them dearly... you could say SAP is not an options machine either but they had a huge head start in apps. Oracle came up from behind and was gaining early on... now I feel the apps business at Oracle is floundering based on their personnel policies- they just can't seem to get a quality product out the door. Lizzie

To: hueyone who wrote (17742)	1/6/2003 9:20:38 PM
From: lml	Respond to of 19079

"If you were the only shareholder of Oracle, and you could not reasonably expect to sell the company to someone else, thus being forced to rely strictly on Oracle's business performance for your well being, you would probably be seriously disappointed so far to learn that your 4.84 billion dollar investment had only produced a 9% total return (456 million dollars) over 14 years (assuming the 4.84 billion from shareholders came in the beginning which is not true)." The fallacy in your analysis is that it is unreasonable to have the expectation of not being able to sell the company to someone else. Such presumptions belie share price. Obviously other valuation approaches are necessary to reflect to true market value of one's initial investment. "Now of course, Oracle has intellectual property, real estate and other intangible assets on the books that are not carried at market value, so it is up to you and me to decide what these assets will earn going forward and what they are worth and reflect them in our own estimates to determine Oracle's market capitalization." That's right. But its not up to you or me, but rather the market. Bottom line, if a shareholder wished to sell today, the ROI from 1989 would be handsome because the market holds certain expectations for ORCL going forward.