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Technology Stocks : Novell (NOVL) dirt cheap, good buy? -- Ignore unavailable to you. Want to Upgrade?

To: Marc Newman who wrote (22726)	6/17/1998 3:55:00 AM
From: Gary Ku	Respond to of 42771

Can the company keep on buying back its shares to fuel the rally? NOVL claims it will buy back up to 10% of its shares. If it does, what will happen to the shareholder's equity? The following is the calculation: Total assets before buy back: 1902 M Total assets after buy back (assume at $13 a share): 1447 M shareholder's equity: before buy back: $5.34 after buy back: $4.50 You can see the stock buy will dilute the shareholders's interest. If that is not bad enough, let's wait to see when the employees execute their stock options in July. The shareholder's equity will be further diluted to $4.00 a share.

To: Marc Newman who wrote (22726)	6/17/1998 8:07:00 AM
From: Paul Fiondella	Read Replies (1) \| Respond to of 42771

Cramer's commentary is superficial He makes two points: (1) Japan is a major source of investment capital (all those Japanese bank loans to Indonesia for example) Last month alone they moved $25 billion in domestic savings into investments abroad. Therefore a collapse in Japan's banks would cause havoc with capital flows worldwide. (for example the cashing in of US Treasuries) (2) The weak YEN hurts other economies in terms of competition for the sale of goods and unless Japan stimulates its economy to absorb these good they have to be dumped somewhere (for example here.) Gee so they should do a Resolution Trust and they should pump money into the economy with massive tax cuts. Sounds just like what we did right? How original. America saves the world. Unfortunately the Japanese have the ability to transfer this crisis to the US economy. This dirty dark little secret is one which Cramer hasn't got the intellectual fortitude to discuss. While Japan's banks may have a lot of bad loans on their books, Japan is not a debtor nation. It doesn't have trillions of $$$ in debt outstanding to other countries financial institutions, private citizens, and national treasuries. It loans money abroad. What happens when it asks for the money back? A certain other country which prints $$$ and ships them abroad, thanks to its currency being a reserve currency, has been successfully stimulating its economy with massive consumer debt and enormous balance of trade deficits --- paying off the Japanese and others with paper $$$ for as about as long as color TV's have been in the living room. It is precisely this accumulation of debt and the prospect of addressing it in a Japanese induced US recession that Cramer and other pundits ought to be worrying about. (Incidentally the classic overproduction of goods and shrinking of markets that causes the classic 1950's style recession, and not the Fed, is what anyone could read in the teas leaves of the YEN if they bothered to get their heads straight.) ======================== Well Marc at least you can short NOVL at the top!