(this will be my last email to the mailing list on the subject, due to its off-topicness.)
On 30 Jan 2003, Oleg Goldshmidt wrote: > guy keren <[EMAIL PROTECTED]> writes: > > > On 30 Jan 2003, Oleg Goldshmidt wrote: > > > > > Well, IIRC in September 2000 Intel lost $91 billion in one > > > day... > > > > you surely realize these are not losses 'in one day'. the stock value of > > the company (or of its holdings) dropped over a period of time, and in > > their reports for a given quarter, they decided to adjust their 'reported > > money worth' to (part of) this drop in stock prices. thus, this is loss > > just 'on paper', much like it was a gain just 'on paper' when the stock > > prices shot to the skies. > > It was a loss in one trading day. If you were to buy (the whole of) > Intel in the morning and sell it in the evening you would have lost 91 > billion dollars (wrong, of course - you would be a market maker for > Intel then). Think what you may of stock prices, they reflect what > the markets think of how much a company is worth, which is just about > the only half-reasonable notion of value there is. I did not quite > understand the "they decided" in what you wrote - they do not decide > what their stock is worth. obviously, we're talking about two different things. you're talking about 'market price' of a company. when this price drops, the company does not loose money - its share holders do. i was talking about the 'value assesment' of a company's holdings, as written in its books. this is something that is in control by the management of the company - not by the stock market. if company A holds part of company B, and company B's price in the stock market dropped - then company A does not have to change the value it attaches to its share of company B, if they think this change is 'temporary'. and when the price of a stock falls or jumps on any given day, this is usually deemed as temporary by most managements. furthermore, when a company is sold or merged, usually a 'value assesment' is being ordered from a financial consultant by the buyers and by the sellers - and it often does not match the stock price. > Actually, IIRC, in that particular case (Intel again) there were no > "real losses" in your definition. On that day (or maybe the day > before) Intel reported that their European sales grew by a few per > cent in the previous quarter. The problem was, the world was expecting > higher growth. That expectation was of course reflected in INTC stock > price (if you look at the graph, there was a sharp rise before that > drop). This is identical to the situation with AOL/TW, in principle, > but on a much shorter time scale. when i refer to losses - i refer to what the company writes in its quarterly and yearly reports to the stock market - the figures there got little to do with the stock price of the company. for example, when lucent lost almost 50$ billion in one quarter during 2000, it was mostly because they decided to 'write off' a lot of 'virtual incomes' (i.e. sales that were written on paper, for which they got no money, and which they financed with their own money). the loss happened a while before that already - its just then when they finally decided to 'write it off' in their formal report. its not that they shelled out money to someone else, and its also not that their stock price droped by that much - they only droped by that much _after_ they sent out these reports. so as you see - we're talking about different issues. btw, in israel, there is an attempt now to pass a decision that will force public copanies to value their holdings in other companies based on the stock price (its called "Teken 15" by the people dealing with this) in order to avoid situations such as when "Kur" wrote E.C.I's value in its books, as being about 4 times their value in the stock market, after the change was not realy temporary. -- guy "For world domination - press 1, or dial 0, and please hold, for the creator." -- nob o. dy ================================================================= To unsubscribe, send mail to [EMAIL PROTECTED] with the word "unsubscribe" in the message body, e.g., run the command echo unsubscribe | mail [EMAIL PROTECTED]
