Hate to disagree but stock prices are a reflection of the company's shape. Most company's hold stock off the market. This unsold stock is considered an asset. For example hold a million shares off the market at $10/share and you have $10 million in assets. Companies that go for long periods with marking a profit and lack the funds to keep operating while they develop new products or reorganization usually have to depend on borrowed capital. The ten million in stock assets can be used to back loans and get get loans at a lower rate. Let that stock drop to $.50/share and your assets decline to $500,000 or a loss of $9.5 million. In Caldera's case there is not only the loss, but the Stock Exchange usually delists stocks that drop below $1/share. Once delisted the stock held becomes wall paper. No loans, no cash, close the store. To keep this from happening about six months ago Caldera did a reverse split of four old shares to one new. That drove the price of a share over $2/share and now it's back to a low that can get it delisted if it stay at that level very long. In all likelihood Caldera is gone, a victim of mismanagement. Their only hope is to sell the company to some one like Red Hat or $MS.
dep wrote: > begin [EMAIL PROTECTED]'s quote: > > | *** Thanks Gerry & Dep for the crash course! I got the context > | wrong by not understanding what the share value drop really ment. > > actuallythe drop in share value isn't *directly* tied to what the > company is doing. it's based instead on what investors think the > potential of the company is. for instance, 100 years ago there were > companies doing well selling buggy whips. people who thought that > automobiles would never catch on probably thought that investing in > buggy whip companies was a good idea -- they were making money, after > all. but at the same time there were people who had this other idea, > building automobiles. they weren't making money at the time. and in > order to get into business, do development and establish the things > necessary for manufacturing, distributing, and selling cars, they > needed money. so they sought investors who believed or could be > talked into believing, that even though cars weren't a profitable > business at the moment, they would oneday be, so people who were > willing to finance car companies might end up making a lot of money. > in some cases loans were made to the companies -- the equivalent of > corporate bonds, which pay, generally, a fixed rate and which are > repaid before the company's owners get anything; in some cases shares > of stock -- part ownership in the company -- were sold. these can > rise and fall in value based both on dividends -- the piece of the > company's profit due each part owner based on the number of shares > owned -- and on the likelihood that the value of the company itself > will rise and fall. (if you own 1/100 of the company, and it pays > nothing each year in dividends, if the value of the stuff it owns in > land, equipment, and inventory has grown, then the value of the piece > of the company has grown, too.) > > now. we've seen red hat shares rise to an insane $252.00 since the > company's initial public offering in 1999, then drop again, to > friday's close of $5.03. when it was $252.00, the company was not > profitable, but people believed it would be hugely successful. now, > at $5.03, the company is actually making a profit, but people's > enthusiasm for its future has diminished. and the fact is, it's > probably a decent $10 stock. > > so the drop in caldera share prices, from about $1.00 to $0.74 on > thursday and a friday close of $0.87, means that following > wednesday's announcement those who had invested in caldera decided > that caldera wasn't in such good shape after all, so some of them > sold shares for the best price they could get, which was $0.74. but > friday, when ransom love had offered his explanation, investors were > feeling a little better about the company, so they were willing to > pay more to get it. remember -- in stock sales, the governing factors > are both what people are willing to sell it for and what people are > willing to pay to get it. > _______________________________________________ Linux-users mailing list - http://linux-sxs.org/mailman/listinfo/linux-users Subscribe/Unsubscribe info, Archives,and Digests are located at the above URL.
