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Technology Stocks : 3DFX -- Ignore unavailable to you. Want to Upgrade?

To: Chip Anderson who wrote (7370)	9/18/1998 8:27:00 AM
From: RDH	Read Replies (3) \| Respond to of 16960

regarding MFs article on Ballard: (http://www.fool.com/features/1998/sp9809173dfxCeoComments.htm) The company is not planning a share buyback any time soon, Ballard said, adding that repurchases aren't usually effective in boosting a company's stock price. "The board would rather we save our cash right now and use it for other growth opportunities, whether it's acquisitions or investing in the future of this company," he said. "I consider this to be a wonderful opportunity to buy into a company that I believe is going to be the leader in this very exciting area." Certainly, no CEO is this naive. Reading between the lines, he seems to be saying "A share buy back is not a particularly good investment, even at these prices". Perhaps they need their cash for future trouble. Repurchases don't help the stock price? In the long term it does, and sometimes in the short term (look at CY for an example of how well stock buy back can help -- CY went from around 6 to 8 because of just the announcement of increased buybacks). CEOs love to acquire even at a low rate of return -- if the stock is really undervalued why not buy it back to get a better ROI than acquiring other companies or technologies. I am long a fair amount of TDFX, purchased at 17, and so I am troubled a lot by these comments. To me, such a prounouncement by Ballard is particularly bearish and also an indication, in my own opinion, that he doesn't fit Buffett's definition of a candid CEO. If there is bad news, Mr. Ballard, please tell us. If the stock isn't a good investment for TDFX, then why should we believe it is a good investment for us investors. Company won't buy the stock, company management won't buy the stock, institutions don't seem to be buying the stock, so what is going on? Why do so many CEOs pretend that the interests of investors are served by hiding the truth? We know that the majority of CEOs have little or no real interest in the investor -- so why bother pretending. What he should have said is: "I won't pretend that this is wonderful opportunity to buy into a company that has more problems ahead. I am not buying, management of this company is not buying, board members are not buying, the company isn't buying, so probably best not for anyone else to buy. In fact many of us continue to sell our shares." Now that would be candor. - RDH.