Dribbling the Ball to Nowhere

What brings together miniature display imaging technology, gaming software, and solar energy?

Answer: Three companies that have done nothing for their shareholders for the combined 40 years that they've been in the public markets. The companies are Microvision (Nasdaq: MVIS  ) , GigaMedia (Nasdaq: GIGM  ) , and Energy Conversion Devices (Nasdaq: ENER  ) . They've been dribbling the ball to nowhere.

If -- with an objective eye -- you course through their business plans, and evaluate their financial statements, I think you'll agree that it's likely that these three businesses will create no aggregate shareholder value over the next 10 years. Sure, they may bounce around from $3 to $6.50 to $2.25 to $8.75 back to $3.25 from year-to-year. And storytellers and speculators will attempt to call the entries and exit points to perfection. Some will make money. Most will lose money. But in the end, these firms will contribute nothing more than background noise to the wild minority of public businesses that create lasting value for their owners.

When I scroll back through the news stories on a company like Energy Conversion Devices, and read glowing praise like this for a company that has burned through cash for 17 years and created no ownership value ... I remember how important it is for long-term investors to read past the fairy tales, ignore the technical analysis, and bear down on the financial realities. You will look upon articles like this one, brimming with enthusiasm when the shares were much higher than today, and click on past.

Doing so will make clear that more than 70% of all public companies out there are not worth your time, your intellectual curiosity, or your capital.

Fool co-founder Tom Gardner and Motley Fool Stock Advisor co-advisor does not own shares of any companies mentioned. The Motley Fool has a disclosure policy.


Read/Post Comments (9) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 25, 2010, at 9:33 AM, 8martini8 wrote:

    Wow -- this is the least substantive article I've seen on the Fool since I joined ten years ago. It's not that it snidely dismisses the prospects of three companies, but that it provides absolutely no insight as to how this conclusion was arrived at. "If you look closely, I'm sure you'll agree" is not an argument.

    Out of the thousands of companies arguably "dribbling the ball to nowhere" why were these three companies singled out? Is it a high CAPS rating vs. some significant metric in their financial statements?

    DIsclosure: I am a Microvision investor, so maybe I'm being defensive. But to be usefully provocative, this article needs to provide at least *one* concrete observation about the financials of these companies that points to their futility. Cash burn? Crippling debt? Decreasing margins? What?

    If this were an 8th grade essay, a teacher would regard it as a last-minute bluff written on a school bus without access to any information resources. Coming from one of the founders of TMF -- how often does Tom take time out from the newsletters to write these puff pieces? -- it almost looks like an effort to drive down the stock price for his pals, and I have *never* suspected this of the Fool.

    Tarticle is unfair and unhelpul to investors. It neither "educates nor amuses." It deserves a follow-up that provides *some* measure of substance to illustrate its claims -- then perhaps it may "enrich" the readership.

  • Report this Comment On July 25, 2010, at 11:13 AM, orisk wrote:

    Vapid piece, Tom.

    I have owned a number of story stocks for years before seeing a financial return. All three stocks you cited have complex stories. Why are these three stories "fairy tails"?

  • Report this Comment On July 27, 2010, at 8:55 AM, JMun wrote:

    Further to add, was not GIGM a Pay Dirt recomendation??

  • Report this Comment On July 27, 2010, at 9:39 AM, 8martini8 wrote:

    Let us not speak of HG Pay Dirt. As far as TMF is concerned, It never happened. Right down the Memory Hole.

  • Report this Comment On July 27, 2010, at 12:56 PM, penewize wrote:

    GIGM was also a Global Gains recommendation. What is so obviously wrong with GIGM now that was undetectable when it was a recommendation?

  • Report this Comment On July 27, 2010, at 10:59 PM, 8martini8 wrote:

    To be fair, Tom wasn't on the Global Gains staff (as far as I recall), and it's a good tradition at TMF that there isn't a central TMF authority that "approves" all newsletter recommendations. These "open to the public" articles often cause confusion that way -- they reflect only the opinion of the writer, in this case Tom G.

  • Report this Comment On September 01, 2010, at 5:15 PM, bikingdoc wrote:

    For "Orisk": I guess you mean fairy "tales"!

  • Report this Comment On September 01, 2010, at 5:20 PM, bikingdoc wrote:

    Even more hilarious than the lack of data to support his conclusions is what a little research I did about Microvision turned up: An MF article from May of this year, listing Microvision as 1 of 3 undervalued stocks to accumulate to "amass your fortune"!

    (May 10 article)

    So much for MF's accountability...

  • Report this Comment On December 07, 2010, at 10:46 AM, mhoemann wrote:

    What is this crap article?

Add your comment.

DocumentId: 1244305, ~/Articles/ArticleHandler.aspx, 4/23/2014 2:08:36 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement