You know sooner or later, CREAF will be an irresistible target for some other company with a bloated stock price, like CPQ, DELL, MSFT, etc. If I were Bill Gates, I'd offer 1 MSFT share for every 4 shares of CREAF and I'd pick it all up cheap, including the ex-insider shares. Then I'd instantly have another $2.40 to add to my earnings, nearly doubling them at the cost of only 22 million shares or less than 2% of total MSFT shares. Right now, those 22 million shares are only expected to yield 6 cents in earnings.
MSFT people themselves have been consistently mentioning the excess valuation in their stock. This move would instantly take care of that problem and leave them with an average market multiple, not to mention another $400 million in cash. Then they could use their new value to finance other endeavours like the cable modems. And with the ex-insiders gone, in a year or so I could sell CREAF for twice what I paid for it, if I wanted to.
The thing is, once CREAF was under the Microsoft umbrella, nobody would really care where their earnings came from. They would just look at the Microsoft name and the low multiple and say what a great buy. Then they'd start running up MSFT again and I'd be even richer.
Dennis (I wish I were Bill) G. |
