news

[dep]

begin  Zoki at linuxix.2y.net'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.
-- 
dep

http://www.linuxandmain.com -- outside the box, barely within the 
envelope, and no animated paperclip anywhere.