I think you've hit the logic of a tracking stock.
If Microsoft has an asset, such as the internet part of their business, and they feel this asset has a greater market value than the other parts of their business, they may wish to establish this value and use this new knowledge to their advantage.
How to do this? Segregate this part of the business and issue a separate stock to represent this part: something like a spin-off. Take a 'best guess' as the value of these shares and sell a few of them to the public at this 'best guess' price. Put the cash received into the treasury. Let the market trade these shares for a while, establishing their true market price. Now, Microsoft has in their treasury a large quantity of these shares, AND, they the value of these shares is well known. If any of these shares are sold, Microsoft's treasury, and thus, Microsoft's shareholders, will receive FULL value for this asset. We're assuming that the market will assign a higher value to these internet related shares than has been assigned to Microsoft's regular stock, making this whole exercise profitable.
Once Microsoft has in their possession a 'cheap currency' they can acquire assets at little cost. This can only augment the value of the current shareholders' investment. I view this as a positive development.
Cheers, PW. |
