[ale] OT: corporate finance 101

[rob hoppe]

Chris Fowler wrote:

> Many reasons.  I've worked for a few public companies and can say never in
> my life have I learned to scam like those guys.  I have a saying.
>
> When you are a child you believe money grows on tress.
> You grow up and realize that is false.
> Then, you work for a public company.  You know somewhere there
> must be a damn tree with money growing on it!
>
> This is especially true for companies who have little sales.
>
> How do they do this.  Easy, fools that want to invest.  If you had a crazy
> brother that wanted to star his company you would give him say $100.00.  He
> would ask for $100.00 each week.  Sometime you ask. "When am I going to get
> my return?"
> When investors ask this, it is time to find another fool.
>
> Stock Prices.  These could be used for many things.  Lets say you had $0 in
> the bank and you wanted to buy another company.  You in agreement with that
> company decide to give them 100,000 shares at a value of $40 per share.
> Before the deal is closed the price goes to $20.  Now you have to fork over
> 200,000 shares.  Or maybe the deal goes null and void.  I believe that stock
> is good for the economy but so many companies fail in 3 areas.
>
> 1.  Management
> 2.  Innovation
> 3.  Sales
>
> I believe they can fall in that order but someone correct me or add to the
> list.  When you are public your books become public knowledge.  When sales
> fall you it reflects in your quarterly statements.  Read some of a failing
> company.  Read the press releases you can sense the death or failure.
> Basically 2 and 3 are a bad cycle.  Without innovation no one buys.  Without
> sales you can't pay development costs.  You then spiral like a plane out of
> control until you crash.  So you try to recover.  You do the following.
>
> 1.  Fire Management
> 2.  Hire New
>
> You Hire New to pump faith into investors on the future of the company.
>
> 3. Recruit investors
> 4. Pump out press releases that fluff your company
>
> This will continue until you pull out of a spin or hit the ground.  Problem
> is there are fools wiling to invest.  Too many fools.  It is a slow and
> painful death for you and your employees but the company somehow manages to
> go on.  This is the way it is with many public companies that are in this
> environment.
>
> How do you fix it?  SCAM!
>
> Find any rule you can get around or break that makes those quarterly reports
> look good.  Hint,  reports are due 45 days after end of quarter.  If you
> invested in a company that released theirs on that last day they can only be
> 2 reasons.
>
> 1.  Laziness (Unlikely)
> 2.  Loss of $$$
>
> If a report looks good the faster it is released the better the stock price.
> You can basically be loosing money but if you can keep the price up, you can
> get investments.  Oh yea,  keep the business plans pumping out of the works.
> Create
> a new for each loss of investor.  If you like drama, become an office in a
> public company that is a failure.
>
> Sometimes a company can't get investments.  If the price is too low they
> have to pump out major amounts of sales to pay bills, pay salaries.  Every
> time they do this it can dilute the shares owned by shareholders.  Not a
> nice thing.
>
> Feed on this.  You need 2 elements to break rules or laws.
>
> 1.  Opportunity
> 2.  Time
>
> How to become a .com billionaire.
>
> 1.  Find a dumb investor
> 2.  Build a pseudo company
> 3.  Market the hell out of vaporware
> 4.  IPO
> 5.  Wait till you bloackout time is over
> 6.  Sell your stock or live a nice lifestyle
> 7.  Bankrupt the company
>
> Many did the above correctly.  It was too late for LinuxOne.
>
> Enron had both.
>
> -----Original Message-----
> From: James P. Kinney III [mailto:jkinney at localnetsolutions.com]
> Sent: Monday, January 21, 2002 8:29 PM
> To: Atlanta Linux User Group (E-mail)
> Subject: [ale] OT: corporate finance 101
>
> Why do companies panic when their stock price falls? They are not the
> ones selling it. Unless they are in IPO, or have a new release. The
> stock buyer pays the stock seller. The only time the company gets the
> money is when they are selling. Someone please enlighten me as it makes
> no sense.
>
> I've been reading on the Enron mess and it stinks.

Enron hid everything in false sales much as other companies I have been witness
to.  Some looked great on falsefied books.  Look at the product and the need for
that product.  Cars were a great stock until everybody made one.

I heard on the radio a new power source is coming and the inventor will not tell
who he is or how it works until he can get out the working models.  A demo of
the product is running a set of light bulbs off of a set of batteries using the
new! power source and the batteries or still charged after hours of on-time.
The cold-fusion process probably worked well but the people were quieted due to
killing the oil companies.  If this new power source works would you buy oil
stocks?

--
_/_/_/_/_/_/_/_/_/_/_/_/
_/  Rob Hoppe  (Atlanta)
_/  770-995-5099
_/  770-560-1050 cell
_/  154*32*21121 Nextel Radio
_/  770-338-5885 fax
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