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Technology Stocks : Trimble Navigation -- Ignore unavailable to you. Want to Upgrade?

To: SKIP PAUL who wrote (2746)	9/4/1998 11:07:00 AM
From: David	Read Replies (1) \| Respond to of 3506

Stock buyback is reinstated (crisis over?): go2net.newsalert.com And the price has responded (up over a dollar). Re: R&D investment. While I think it's great that TRMB has emphasized R&D, simple economic theory emphasizes the concept of "marginal utility," i.e., the usefulness of the last dollar spent on a good as the pricing mechanism for the good. That's why water is so cheap when there is so much already -- the last dollar spent on it doesn't have much value -- and so dear when it is scarce. In Trimble's case, the marginal utility of dollars spent on R&D will decline as the best projects are funded and more speculative ideas receive money. Unfortunately, that tends to reprice the entire value of the R&D downward. Further, the company's has failed to drop 'first dollar' profits to the bottom line (which has significant share price and financing value), which represents a significant lost opportunity in marginal utility terms. In other words, a better managed company would allocate some of those last R&D dollars to 'first' profits, and marginal utility of all TRMB cash flow dollars would be maximized to the benefit of the stockholders. R&D would be more highly valued, per dollar invested, and higher profits would also help maximize the stock price.