[ale] OT: corporate finance 101

[Joseph A Knapka]

"James P. Kinney III" wrote:
> 
> Why do companies panic when their stock price falls?

For one thing, I think companies often own blocks of
their own stock that they keep in reserve as investment
capital or whatnot.

I currently work for a non-public company, which I've
been with for nearly ten years, through at least three
changes in ownership. It's *very* nice not to be at
the direct mercy of public markets -- though of course
everyone suffers to some degree during an economic
downturn, I don't have to worry that some corporate
bigwig is going to panic at a stock price projection
and axe my job tomorrow. The down side, of course, is
that it's hard to get rich overnight without some
stock to sell, acquired at a discount through the
employee purchase plan.

Until about two years ago, my employer was a subsidiary of
Science Applications International Corporation, a privately-
traded, employee-owned firm -- you *must* be an employee of
SAIC in order to own SAIC stock (minor exceptions, like you
can have SAIC stock in your retirement plan and keep it
if you leave the company). That was *very* nice - we were
more-or-less insulated from the immediate effects of
market downturn, there was a strong culture of
confidence in the value of the company that *we* all
owned a bit of -- and you could make some nice money
investing in SAIC stock on the cheap. If/when I ever start
up my own firm, I'll organize it that way.

Cheers,

-- Joe
"I should like to close this book by sticking out any part of my neck
 which is not yet exposed, and making a few predictions about how the
 problem of quantum gravity will in the end be solved."
 --- Physicist Lee Smolin, "Three Roads to Quantum Gravity"

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