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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year -- Ignore unavailable to you. Want to Upgrade?

To: Tom Smith who wrote (2889)	10/20/1998 10:07:00 AM
From: Melissa McAuliffe	Respond to of 4509

Tom, I read the SAP report and see two issues: 1)They said that Y2k is having an impact on their business. 2)They said sales in the Americas were strong. Both of these issues can be perceived negatively for PSFT. I think it's interesting that SAP is down 3 3/16 this morning after the report and their stock really didn't have any runup prior to their announcement. All I'm saying is that I'd prepare for PSFT to drop either today or tomorrow...In many ways we're lucky that the SAP announcement came out this morning. We can at least see what happens to SAP stock. Melissa

To: Tom Smith who wrote (2889)	10/20/1998 10:56:00 AM
From: mauser96	Respond to of 4509

The stock market is a forward looking discounting mechanism. The exact amount of time that it looks forward seems to be unpredictable, but the past couple of months declines in the entire ERP sector indicates that at the moment it is looking at the valley discussed in the SAP report, not the hills beyond. If this theory is correct the passage of 6 months or so will bring the hills into view. Time is on the side of PSFT investors.

To: Tom Smith who wrote (2889)	10/20/1998 12:18:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 4509

Tom, I disagree with you when you said I am hoping for a share buyback announcement, which would be the strongest possible endorsement of the stock, the company, and the enterprise software sector. The reason is that a share buyback program is nothing more than a disguised dividend (but with the tax advantage that the "dividend" is treated as capital gains). For example, suppose a company is trading for $10 per share and has 10 million shares o/s for a total capitalized value of $100 MM. Now suppose the company has $10 million in cash and wishes to dividend the cash out. Following the dividend the value of the stock will be $9 and each shareholder will have $1 in cash. Now suppose instead that the company repurchases 1 million shares. Now the company is worth only 90 million, but has reduced the number of shares outstanding to 9 million, so each share is still worth $10. The best use of cash is to invest it in the business by expanding if the expected return exceeds certain financial hurdle rates. I know it has become fashionable to institute share buy back programs to "enhance" share holder value, but this is really just smoke and mirrors. Stock runups due to splits are similar psychological devices that really don't enhance value, but are widely perceived to do so. TTFN, CTC