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Technology Stocks : Zenith - One and Only

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To: stilts who wrote (6397)	10/24/1999 7:55:00 PM
From: Robert Utne	Read Replies (1) of 6570

Why is LGE in such a rush to destroy Zenith's perceived value and to pick up the pieces. One very large factor is that LGE has helped to create over $1 billion in US and state taxes losses for Zenith and can use most of the tax losses once it grabs 100% of the Zenith equity. What is this worth to LGE? $200 million, $300 million or more? Another is the brand. What is the Zenith brand name worth to LGE? When you consider than when LGE was competing head on with LGE, LGE had only about a 1% US market share while Zenith had about a 18% market share. My read is that the Zenith brand adds about 10% to the value of all LGE products sold ANYWHERE in the world provided Zenith remains an US-based corporation. There is a cachet about US products around the world and almost a "reverse" cachet within the US to a significant portion of US consumers who support well known/respected brands. We know Zenith TV tuner patents will continue to bring in about $30 to $40 million per year for another five years and that the VSB patents will earn Zenith about $5 per VSB compatible unit (TVs, PCs, etc.) for the next 15 years. The only way to determine the value of the various patents is to put them on the open market. What few realize is that one of the biggest money earners for Zenith during the next decade (including this year) will be the sale of digital set top boxes and integrated receiver decoders. Certainly, LGE does not want to let this asset go, at least, until it obtains 100% of Zenith's equity. What will a further hold on the LGE/Zenith bankruptcy petition mean to the entire community of Zenith? According to LGE/Zenith, nothing. The only benefit to Zenith is that the bondholders will receive less interest payments during the next 11 years. Instead of paying about $6 million in annual interest payments to bondholders, Zenith will pay about $4 million in annual interest payments. A savings of $2 per year. Is that any reason to destroy Zenith? Probably the most important reason that LGE wants the US bankruptcy court to immediately approve the bankruptcy is that LGE will not be accountable to US corporate law including the whitewashing of its alleged self-dealing acts of fraud. No more 10-Ks and 10-Qs to be filed as a Korean corporation and no more need to follow US/Delaware corporate antitrust and governance laws.

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