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Technology Stocks : OnSale Inc. -- Ignore unavailable to you. Want to Upgrade?

To: j_b who wrote (2995)	12/30/1998 3:55:00 PM
From: PAL	Read Replies (1) \| Respond to of 4903

Let me illustrate as why maximizing shareholders value is more important than maximizing profit (I'll deal with AMZN and BKS later). About a year an a half ago, AOL recognized marketing fees and lumped it to the third quarter which made the quarter tremendously profitable. The stock went up. Then the SEC suggested that the fees received should be spread out throughout the life of the contract. Now the fourth quarter arrived. AOL proudly announced it would change the accounting method and use a conservative approach. The third quarter was restated, and it sufferd a loss. But then that portion of revenues which were included in the original third Q is now recognized for the fourth Q, Hence Q4 looked much better than Q3. The stock jumped again. I am not saying that we should follow Creative Accounting, but AOL is a master in maximizing shareholder's value. Afterall Steve Case has a brother Dan Case who is the head off H&Q. There are other methods of maximizing shareholders return. For example, increase cash flow by choosing accelerated depreciation, and use the funds to repurchase stocks. IBM has been doing this for years. The bottom line net income does not have that big of a growth, but EPS jumps significantly. Shareholders are rewarded. Look at NCSP. The stock lingered around. Want to maximize profit and go against MSFT? Jim Barksdale is smarter than than> Sell it to AOL. Take AOL stock as currency, don't take cash. First tax free exchange, second, AOL is a good currency. NSCP has jumped over 60% since the merger was announced. Again shareholders are rewarded. It has nothing to do with maximizing profit. AMZN and BKS. The reason AMZN is valued more than BKS is that AMZN has no inventory, while BKS is saddled with high inventory in their store. I do not know that in the long run BKS is more preferred than AMZN. The fact that BKS is selling one seventh that of AMZN might be an early indication that WS prefers AMZN method. As to ONSL? Since my shares are free (actually negative cost), I am willing to wait and see until the end of January. In the mean time I am going to buy NSCP as to getting AOL through the back door. Caveat: what if the merger does not go through?