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2HSR2GO: Wall Street trembles on the vote count

3 min read

COMMENTARY -- Judging by the schizophrenic voting results, I'm not the only one having trouble focusing my opinions this week. Wednesday ramblings:

  • Wall Street seems to be hanging
    • on the election results, but you have to wonder why, since both candidates seem relatively amicable to investors. In fact, despite the conventional "Bush Good, Gore Not as Good" wisdom on Wall Street, many techies flowed to Gore, according to a piece in Upside Today. The article points out counties in Silicon Valley and Microsoft's home base in the state of Washington saw 60 percent or more of their votes go for Gore.

    Makes sense. Republicans have the rich stereotype, but many of Silicon Valley's residents are newer, younger rich types. And let's be honest: despite all the sound and fury, there's little difference between these guys from a business point of view.

  • The Evil Empire wins the day.
    • The Clinton administration has gone after Microsoft (Nasdaq: MSFT), but that didn't stop MSFT dollars from flowing into Gore's coffers. A Wall Street Journal article from August noted that Microsoft and its employees chipped in $391,000 to Gore and the Democratic National Council. Apparently Microsoft's cash paid off, since its home state of Washington went to the vice-president.

    Microsoft investors apparently aren't worried, no matter how those Florida absentee ballots turn out. Shares of MSFT rose initially today, despite the overall Nasdaq downdraft. MSFT fell in the afternoon, but it's still ahead of the rest of the Nasdaq.

  • Why do companies persist in thinking shareholders don't read?
    • Art Technology Group (Nasdaq: ARTG) is reeling this week because of data that could easily have been revealed and explained, but wasn't.

    Art Technology sold $10 million of receivables to the bank last quarter. The vendor of CRM software didn't bother telling anyone about it during last week's quarterly conference call; instead, it ended up as a line in Art Technology's 10Q report, filed this week.

    Why are investors worried? Because if you subtract that sale, Art Technology's cash plunges to $5 million and its days sales outstanding rises to 84 from 64. The quarter suddenly doesn't look so great.

    Maybe there's a good explanation for factoring receivables. Maybe Art Technology just needed to raise money, though that doesn't sound likely, given that the company reported a profit and is already going into a secondary offering. Who knows?

    But investors should never, ever have to ask that question about the numbers. Just disclose them. Tell people about them, because they're going to find one way or another. At least if executives talk about accounting actions during the conference call, there's a chance to spin it.

    Otherwise, people will just read it in the 10Q and take wild guesses as to what is going on. Believe it or not, shareholders read those things, as do analysts and reporters. In these days of Edgar Online and Freeedgar and SEC.gov and other data sources online, you can't hide anything.

    ARTG shares were down 9 pecent even before TheStreet.com's Herb Greenberg mentioned the receivables, and the decline only accelerated after that. They've lost another 19 percent today, and the worst part is, the company can't say much now because of the secondary offering.

    The conference call was Art Technology's only chance to explain things. Now they're suffering the consequences of silence.

  • Example#19923477 of the market's continuing irrationality:
    • Transmeta (Nasdaq: TMTA) currently carries a market valuation equal to 80 percent of Advanced Micro Devices (NYSE: AMD), while having about one-gazillionth of the business.

  • Last night provided ample demonstration of why Web media
    • will never supplant old media entirely, or at least not until the available bandwidth increases exponentially. Aside from the problem of websites being down, many of the available sites were behind the TV networks in updating their vote tallies.

  • Must be nice to be able to turn down growth.
    • San Francisco voters approved a measure to limit budding technology and Internet companies' ability to expand in the city, particularly in certain neighborhoods. It will do nothing to lower unbelievably high rents, find places for the homeless, improve transit or do anything else that would improve quality of life in this city. It will persuade new economy companies to look elsewhere. But I'm not bitter about it -- it'll be good for another area. 22GO>