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Alea: The risks are more clearly assigned...
than you suggest (at least in the United States). The credit card issuers not only want the merchants to bear the risk of fraudulent transactions, they in fact have the power to impose this on the merchants and do so each and every day. Then they charge the merchant for these fraudulent transactions and, in fact, build said fees into their cash flow models. And, while the merchants would like the consumers to bear it, the credit card companies have very successfully prevented this from becoming a reality. All credit cards trumpet the freedom from fraud loss to their cardholders. No, alea, there are entrenched interest groups that will fight this technology tooth-and-nail every step of the way. The opportunities may be large, but the hurdles are much higher than this group of investors think.
Alea: And what is the cost...
of implementing this grandiose scheme?
Clearly the company no longer believes the consumer is the proper target market at this stage of the game. Now it is the enterprise. But what are the costs to, say, GE for taking a step in the direction of trusted computing? In these days of limited cap-ex budgets, who will decide it's prudent to layer in these costs? Is it even possible to implement such a program gradually? Or must a firm make an all-or-nothing decision? For years this community, zealots and non-zealots alike, have focused on every technological aspect they can imagine, while almost completely ignoring the most fundamental question of all: cost/benefit. This is, of course, typical of the technology-conquers-all thinking that pervades the NASDAQ world.
I figured that...
you would see it that way. Nothing wrong with paying yourself bonuses and fattening up on stock options while you lay folks off. Hey, it's all for the company's best interests that the troika stuffed their wallets one more time.
Well, that's three and finito for me for the day. Please return to the standard visions of wealth and abundance in that WAVOID NATION on the horizon!
24601: Absolutely...
I imagine he had a few bucks left over for taxes, too. You think any of those 1,189,000 shares related to options exercises were not immediately dumped?
Peter sold a mere 500,000 shares....
apparently. From the 10Q:
"Subsequent to June 30, 2003 the former officer sold 500,000 shares of Wave Class A Common Stock, and was therefore able to repay the loans and all accrued interest thereon with the proceeds from such sales of Wave common stock."
Steven's explanation of his stock sale...
was pathetic for two reasons. First, it is common for individuals entrusted with the responsibility of running a public company to know that they can obtain tax advice in advance of executing transactions. For Steven to point to a transaction in a prior year in which he was obviously ignorant of the tax consequences and hadn't bothered to obtain counsel (or obtained incompetent counsel) does not excuse the action he took this year. This ignorance of the financial realities is not a good trait for a CEO to have (much less display and then point to on occasion).
Second, unless Steven is in a mysterious 100% AMT tax category that I am unaware of, it was not necessary for him to sell all his stock in order to pay the taxes due on his exercise. To argue otherwise is either disingenuous or ignorant. That concludes my three post limit for the day.
Furthermore, Steven seemed to be saying...
that he encouraged employees to do the same. To exercise options to "help the company." He did not elaborate, but I suspect the subsequent cashing out of those options was likewise--if not encouraged--certainly not discouraged, and how could it be with the CEO and the CFO immediately dumping 100% of their options exercised.
Obviously, we will never know the extent of the employee selling, since many will fall below the threshold for reporting. However, I think it will be most instructive to see how much of the senior Mr. Sprague's options exercised were immediately dumped. I'm willing to bet it was the same 100%.
Mongo: No I am not on the insider e-mail list...
that circulates various informational tidbits that may or may not be gross violations of insider trading law, Regulation FD, and God-knows-what-all-else. This is pure speculation, based on two factors:
1. If the NEC SCR had met with the sort of acceptance Doma says, there would have been about fifteen PRs already released about it. So far there is only eerie silence.
2. About the time the second deployment might have been expected to occur the entire target market shifted from consumer to enterprise. Like overnight. I suspect this shift was a result of disappointment in the NEC SCR rollout.
If doma wins the bet, this not only concludes my day's ration of posting, it will be my final post on IHUB for the next 365 days. Good luck, Wavoids. I am not the enemy.
Doma: So ask the man the question...
Our bet stands. You say the activation rate of the NEC SCRs was 80%, I say 5%. The closer position wins. There were 8500 deployed. Anything greater than 42.5% of that number and you win. That's 3,613 activations. I'm calling the WAVOID bluff, doma. Somebody pose the question to the man. Make sure he addresses, specifically, the NEC SCR deployment, not the whole 10,500. And none of the usual Steven-style evasions. Make him say there is an NDA preventing him from disclosing the information. Anything less than that is pure Sprague-speak.
Great words, Steven. How about you...
demonstrate the value proposition of your recent "deals" to the investing public. How much do you get up front for each INTEL motherboard? Rachels says maybe a buck. I say a nickel, maybe less. Of course, I could be wrong.
"And we think that's very important to the marketplace, to demonstrate the real value proposition for trusted computing to the broader market."
alea: Wavoid Nation prefers not to know...
any specifics on the NEC SCR deployment. I have suggested that the activation rate was low and/or there were problems with customer service of the activated customers. In any event, the intrepid Doma has informed everyone that he knows the activation rate was very high, estimating it at 80%. We have wagered one year's posting rights--in all forums--as to whose estimate is closer to the mark (mine was 5%). If the NEC SCR activation rate exceeds 42.5% or 3,613 accounts, doma wins and I must depart for a year. If less, it's toodles to doma. I would like the answer to this question if anyone can get an official (or even an unofficial one as long as it's on the record). The absence of confirmation of doma's assurances leads me to suspect that I was closer than he. It goes without saying: I could be wrong.
In addition, I would like to take this opportunity to scoff publicly at the suggestion that the recent SUNW announcement is even remotely connected to WAVE. I seriously doubt that Scott McNealy even knows who Steven Sprague is.
That concludes my quota of IHUB posts for today, many thanks to IHUB Sheriff Matt for his eternal vigilance in protecting the virgin ears of Wavoids from critical remarks coming from infidels.
The August 7 PR mentioned 1,189,000...
shares were sold by the company in connection with options exercised by current and former Wave employees and officers. 150,000 were purchased and immediately sold by Steven Sprague. 100,000 were purchased and immediately sold by Gerard Feeney. That leaves 939,000 shares purchased by current and former Wave employees and officers, of which some portion was sold (we know this because Peter paid back $1,000,000 out of his proceeds). I'm curious how much of the 939,000 remains in the hands of the officers and how much was immediately cashed in. I notice that Mr. Feeney is the only one for whom the public report has been filed as yet. I'm going to guess that Peter sold a half million shares worth. Pure conjecture, of course. And I imagine he's seriously considering loaning the funds back to the company as I previously suggested. After-tax, of course.
P.S. Thank you for the correction you are about to suggest, John.
Steven wins the 2003 Marie Antoinette Award...
For remark most exemplifying the Let-Them-Eat-Cake spirit. As quoted in the Bershire Eagle...
"I wanted to participate in the same way the employees did," Steven Sprague said yesterday.
This remark in response to an inquiry regarding his exercise and sale of options on 150,000 shares of WAVE stock. Mr. Sprague's salary and bonus for 2002 amounted to $411,500. It is unlikely that Mr. Sprague will appear at the award presentation due to his disinclination to sob publicly more often than once monthly.
Sincere suggestion...
And I'm not joshing here. These folks, Sprague, Sprague, & Feeney, have been exceedingly well compensated including over the past year during which time the company was short of funds and staff had to be pink-slipped. If they want to demonstrate good faith, to both the shareholders and their fellow employees, they will take the proceeds from their recent options exercised and sold, forward the taxes to the IRS and the state, and loan back the balance to the company on the same terms as was extended to them.
That concludes my three messages for today.
Alea: I'm not entirely convinced...
as you may have guessed, that the tide has turned. Steven's recent dinner with a small group of message board folk strikes me as either incredibly poor judgment or evidence of desperation. With regard to the Intel deal, Steven was obviously not dealing from a position of strength. He had to get a deal done. Since there is no disclosure of the specifics yet, I am obliged to wonder what concessions he had to make in order to get it. Likewise, IBM. Granted, it's far better to have the deals than not to have them, but those of us from Missouri like to see the fine print.
Alea: You may also be very right...
and, frankly, I think you make a much more compelling case than those Wavoids who would prefer you keep your mouth shut or, at least, take to whispering.
As you know, I have been reluctant to embrace the vision, reluctant to let go of the past, reluctant to let bygones be bygones. If I felt management put the interests of the shareholders above their own--heck even parallel with their own--I might possibly be a buyer. However, the most recent trough-visitation by the big three does nothing to allay that reservation. So I will remain, perhaps to my financial detriment, in NO POSITION mode.
LOAN THE OPTION EXERCISE PROCEEDS BACK!
And demonstrate that, for a minute or two anyway, you can put the shareholders' interests in front of your own. Show some good faith for once in your lives.
Sprague, Sprague & Feeney: Remove snouts from trough...
for a second, please. Acknowledge that you just enriched yourselves further, in a not insignificant way, during a period in which you claim to be working to reduce "burn" from $6 million to $4 million (or whatever). No doubt those individuals whose jobs have been "downsized" will be very happy for you. Perhaps you can send them something from Harry and David's.
How noble...
"I wanted to participate in the same way the employees did," Steven Sprague said yesterday. "There's no doubt I benefited personally, but my motivation was to help the company's resources perhaps more than my own."
Here's a suggestion: If you really give a rat's you-know-what about helping the company's resources, what say you and your father and the CFO take your after-tax proceeds from the option exercise and loan them back to the company on, say, the same terms as the recent officer loans.
One final point today...
and my three posts are exhausted. The PR that discussed the options exercised stated that 1,189,000 shares were involved. It was further disclosed that Mr. Feeney and Mr. Steven Sprague exercised options on some number (I forget exactly how many at the moment). It disclosed that Mr. Peter Sprague exercised options and sold enough to repay his $1 million loan. What it did not disclose was the entire extent of the options the senior Sprague exercised and how many, if any, he retained and how many he sold. It strikes me as odd that the disclosure was made with regard to Steven and Feeney but not Peter. I'm wondering if the theory behind that is that Peter is no longer an officer or a director and therefore it is not necessary to make such disclosure outside of the regular SEC filing. In any event, I am curious to see the total amount exercised and the total amount sold by all insiders. I would hope such disclosure will become public prior to the conference call next week.
A clarification...
My remarks regarding what I consider to be continuing piggishness on the part of Sprague, Sprague, and Feeney are what they are. My opinion. And, while I cannot invest in a company with this sort of governance, it does not necessarily follow that I believe those who invest here will not be well rewarded. Certainly there are signs that they will be. The INTC PR and the IBM PR are positives. In fact, I personally would be inclined to invest in this company if I trusted the officers to put the shareholders' interests above their own. Unfortunately, I don't. Others may differ with this assessment. Still others may agree and yet decide to waive the concern. In any event, y'all are on yer own. I ain't in, but it's not the same as a sell signal.
Heads-Up Wavoid Nation...
The Financial Journalist is for real. I am not at liberty to give the person's name or organization, but it would behoove someone with a more balanced point of view than myself to respond to his/her request for information. I acknowledge that I am biased against management (especially the big 3) and also against the cult and its more zealous participants. For these reasons I concede that someone else's views should also be considered.
As to Snackman's resignation, I agree with Bigtim's assessment. I want to make sure that everyone understands that I was not the person who made the racial slurs against him (or compared him to Moses). I did disagree with him on numerous occasions and I did refer to him as Il Duce (having foregone the other reference because of the obvious insensitivity of even mentioning the Nazi leader's name in addressing a Jewish person). Furthermore, I was always respectful toward Snackman until he accused me of disingenuousness. I consider that the same as calling a person a liar and I don't like being called a liar. I offer no apology for that.
Mongo: My opinions are clearly labeled...
I admit it is possible for me to be wrong. And, given the many positive opinions given for everything under the sun, it strikes me that a little balance is what I add. And, while it's true that I did not think the INTC achievement would ever happen, it does not mean that all of my prior remarks become invalid. I did advise selling the stock at $14, when I sold. Those who heeded my advice have considerably more money in their pockets as a result. They can now come back in and buy the stock for a fraction of their sale price. Consequently, I think the argument that listening to me was harmful is obviously incorrect.
Be that as it may, despite all the criticism, no one has addressed the issue of the three officers electing to sell shares less than two weeks after the CEO was making the argument that insiders were eager to buy. When I see insiders begin to buy and hold for greater than five minutes at a time, I may reevaluate their behavior.
I would like to point out that I have attacked no one today, in keeping with my new and improved all-civil-all-the-time Howie. I expect reciprocation.
Equally curious is the fact...
that of the 1,189,000 shares exercised there is disclosure of the number purchased and sold by Steven Sprague and Mr. Feeney, but there is no similar disclosure of Peter Sprague's options exercised and sold. Cynics might wonder if the move to non-officer status of Sprague senior is the justification for leaving that disclosure out. Clearly he did sell some shares. I think it is not unreasonable to expect disclosure of his transactions also, given that he is CEO of a subsidiary, among other things.
I find it interesting...
that when asked in the MY DINNER WITH STEVEN escapade about the absence of insider buying, the CEO's reported response was essentially that insiders were dying to buy, but were reluctant due to fears about insider trading violations. Now, however, several days post-INTC/IBM news, it appears that there has been ZERO such buying (by Sprague, Sprague and Feeney)and on the contrary significant insider selling by those individuals. And the explanation for this would be?
24601: That's one point...
and I agree with that. My point was a different one. My point was that the money that changed hands in the options exercised was far more beneficial to the officers than it was to the company. The company, with a little foresight and, say that million bucks that it had loaned to Mr. Sprague senior in the bank, could have acquired Treasury stock for less than a buck for this specific use. It is quite a common practice and one that should have been employed here.
Call it a theoretical haircut...
on the basis of what those shares cost versus what they could have cost if they'd come from an even minimally-stocked Treasury (that could have been acquired really cheaply). In any event, another fat payday for the boys! Drinks all around!
24601: I misspoke there with the necessarily...
qualifier. It, by definition, isn't unissued.
P.S. Thank you eamonn. The jailhouse is fairly good company, actually. I felt quite at home.
24601: Treasury stock does not mean...
registered but unissued necessarily. Many companies put bought-back shares into the Treasury stock category on the balance sheet. WAVE could have done so, but I agree they appear not to have had the foresight to do so (or the cash).
I am particularly overjoyed...
to see that Peter has repaid his loan. Of course he did it, apparently, with profits on new options exercised which represents cash the company could have raised merely by selling treasury stock without erasing a million dollar receivable. Chalk up another one for the boys in Lee!
Truly magnificent financing...
Let's see. Wave has another 1,189,000 shares outstanding after the employee options are exercised, yielding $2.6 million. So the options garnered them $2.19 per share or approximately 62% of what they could get at the current price by selling treasury stock on the open market. So the company essentially takes a haircut on those 1,189,000 shares while these particular individuals stick more money in their pockets. If you use the average $2.19 per share as a cost (and that's merely for guesstimate purposes) and assume Steven sold at two bucks more than that, sonny-boy ends up with yet another fat payday: this one about $300K worth. Feeney, on the other hand, only ends up with a mere $200K using the same cost and sales price assumptions. Yes, this seems about par for the course.
Matt: I have no other accounts here...
I promise not to attack posters and not to gripe any more about deleted messages.
Attention Wavoids and Sympathizers!
In conjunction with the flood of e-mail condemning Ellen Sheng for her odious and no doubt influenced-by-Communists reporting of the past two days, I call on all Wavoids to immediately drop their pennants and bugles and flood CNBC with demands for the firing of Leslie La Roche! Only a determined effort by the cult, er, group will effect a change in the way the media report WAVX releases. Everyone should realize that when WAVX says it has a partnership with IBM that it actually means that it sorta just has an agreement that enables IBM to stick some CDs in a carton if they, er, wanna. And that concludes my messages for the day, thanks very much to my lordship, the one and only Matt, to whom I am this very moment taking my hat off and, yes, gesticulating enthusiastically.
And I say that with enormous humility...
and everlasting respect for your lordship.
Damn it Matt...
Would you at least tell me why I am still in the pokey? Or how long I am stuck here? Are you gonna require me to respond to IHUB posts on Raging Bull forever? Sheesh.
That's not much of a hint...
True, I used to blast the now-defunct Premier Laser Systems mercilessly, but that wasn't here, so that can't be it. I've promised to abide by the rules. I've revised, twice now, my profile. So what do you want?
Matt: Is my sentence indeterminate?
By the way, the WAVX sage Sorosman, once posted that he had an MBA from Stanford and a degree from some Ivy League school (Harvard, I think). Then, about two posts later he used the word hypothecate when he meant hypothesize. Obviously, any real economist would slit his wrists over a howler like that, but, of course, the Snorosman is no economist. He is a half-talented P&D specialist. Of course, it would be too uncivil to point that out under the IHUB guidelines.
Third Amendment bull sessions?
Now that's a high-falutin crowd for ya. Last time I worried about having soldiers quartered in my house it was 1969 and I'd just been one myself and the two that concerned me couldn't keep their grubby hands off my favorite houseplants.
I may be the wrongest person since...
Herbert h Hoover.
If being wrong leads to deification...
then call me HolyHowie from now on.