"I am looking for ways this stock doesn't go up significantly in next few years and having hard time coming up with that scenario other than market in general tanking. Happy to hear other thoughts thoug."
Response:
To confirm I make no claim to be a tech guy. I depend on posters on this board for tech perspective. I also look to info that is publicly available.
While I remain concerned about the pace at which GE seems to be developing EBM vs. Laser, this is not my only concern. My main concern is the extent to which GE respects that Arcam is an an independent company with shareholder other than GE.
You ask...How could the stock not go up? One thing that GE could do is load up on expenses on Arcam's balance sheet. Expenses for things like hiring staff to support EBM development within GE. Expenses that might be more geared toward's GE best interest but not so much Arcam's. These would be employee expenses that.. before the acquisition GE would have put on their own books.. but after the aquisition GE has the option to put on Arcam's books.
I agree with you that it is hard to come to any conclusions as to GE's motivations. That said, if I had to take a guess I would say our position as investors has gotten a bit more tenuous with new management. Immelt might have had an incentive for Arcam's books to look good. It would have reflected well on him and his decision to invest in Arcam. The new guy may not have that incentive. In fact, he might have an incentive to make the Arcam investment look bad ... so that investors are reminded about how he will have to overcome Imelt's bad decisions.
The bottom line is that I don't think we can't escape the fact that the extent to which Arcam's books look good will be a function of how GE's finance people decide to account for revenues/expenses. GE is well know for having a very good team of finance people who are very adept at legally advancing GE's best interests. For exaample, I understand GE has historically paid a very low corporate tax rate year after year ... due to their handling of their finances.
This is a lot of conjecture on my part. But it helps establish for me a framework for how I am going watch and assess Arcam moving forward. Arcam is still a big part of my portfolio and for now plan on holding for a long time.
One thing I am going to try to find some info on is how is Arcam's sr. is management being rewarded in terms of bonuses (assuming they have bonuses). Are they being rewarded based on Arcam's metrics (e.g. revenue growth, profitability, share price)? Or, are they being rewarded based on metrics that look at the extent to which EBM is benefiting GE generally? The answer to this question could provide some insight as to how GE intends to handle Arcam and which stock holders will benefit most from Arcam IP and growth.
PS. Anyone know if Arcam's Board of Directors includes any directors that were selected specifically because they are independent of GE (e.g., a board member nominated by Eliot Management)?
