Venture capitalist Roger McNamee, a founding partner of the venture firm Integral Capital Partners, thinks that “the marketplace confronting technology executives has changed radically from five or seven years ago, and the nature of the relationship between tech companies and Wall Street is almost unrecognizable compared with a decade ago,” John Shinal reports for MarketWatch.
“McNamee [said] that the worst thing tech CEO’s can do is respond to the short-term demands of investors. On the other hand, executives that stick to their strategic vision, even while thumbing their nose at Wall Street, usually reward their investors over the long term,” Shinal reports. “He pointed out that Apple Computer CEO Steve Jobs boosted research spending earlier this decade, even as other tech firms were slashing costs to preserve their income statements in the face of plunging stock prices.
That R&D spending push produced the iPod, which has transformed the company and driven its stock up more than four-fold in two years, even as Hewlett-Packard (HPQ) and other big firms once known for their innovation have languished. ‘If you see the management of a company you own responding to Wall Street, sell the stock,’ McNamee advised. Still, trying to guess near-term valuations is a fool’s game, McNamee said. ‘The iPod might be the most important consumer brand right now, but I couldn’t tell you what that means for the stock.'”
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