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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Big Bucks who wrote (10331)	6/10/2004 3:39:04 PM
From: The Ox	Read Replies (1) \| Respond to of 25522

Until MSFT can decide what to do with the billions of dollars in cash (that are literally wasting away on their balance sheet), I don't think there will be much more institutional demand for MSFT stock then we have at the moment. If MSFT's management can't figure out how to return the money to shareholders or how to invest the money in the company's future, then I don't want to own the stock. Until they can get a clue about how to use their excess cash flow, then I think it's wise to stay away from them. The cash keeps rolling in and it just sits there. That's no way to run a company, imo. EDIT: this has nothing to do with the number of shares outstanding, btw.

To: Big Bucks who wrote (10331)	6/10/2004 5:45:34 PM
From: TimF	Read Replies (1) \| Respond to of 25522

So if MS earning's are good, why aren't the funds/institutions continuing to buy at these low levels? Maybe because the funds and institutions don't think the levels are too low or they think the levels will be even lower in the future. MS has saturated the market with shares, there is no reason for institutional investors to add more A better statement might be that MS's market cap is high and the funds already feel they own a big enough share of that market cap. I own 700 shares of AMD. This post isn't about the wisdom of that investment choice but I do expect to make a profit from this investment. In fact if I had the available funds I would consider buying more. If AMD made a ten for one split and I now owned 7000 shares of AMD at 1/10th the price per share it wouldn't change my investment calculation at all (unless I though it was silly to do a ten for one split with the price is under 16 and decided I didn't want to continue to hold shares in a company with silly management). I wouldn't suddenly have a large enough position just because I now had 10 times as many shares. MS's growth curve is flattening out relative to the number of shares outstanding and the likelihood that the shares will increase geometrically, as they did early in the growth curve, is unlikely. MS's growth curve is flattening out because its markets are a bit more mature and because it has a huge market cap. Its harder to rapidly grow a $290bil company then it is to grow a company that has a IPO of under $100mil (like Microsoft in 1986). It would be just as hard to get rapid sustained growth of the $290bil company if it had a lot fewer shares outstanding. Would you expect MS's share price to rise if they do an active share buy back program? Investors might see a large share buyback program as a sign of confidence in the companies prospects, also the buyback would directly create demand for MSFT shares so I would expect upward pressure on the stocks price (but of course other factors could be larger and move the stock down anyway). A reverse split would not directly create demand and would not be a bullish sign of confidence in the stock so it should not move the stock price up. Tim