Compaq Message Board - Msg: 12276360

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Technology Stocks : Compaq

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To: Night Writer who wrote (73723)	12/13/1999 7:43:00 PM
From: rupert1	Read Replies (2) of 97611

NW: Would I vote for $50 a share buy out - in an instant! I think the majority of shareholders would too. If they thought Philips was getting a bargain at $50 they could convert the cash to Philips shares. A bird in hand is worth two in a bush! I'm sure management would try to stop it - after all they have very fat salaries, perks and options schemes to lose. But what could they do? The best way management could prevent an acquisition is to improve the value of the shares. But for the last two years or more COMPAQ's culture has been to grow revenues, payroll, prestige, rating in the Fortune 500 and to take shareholders for granted. If it had been really keenly focussed on shareholder value it would have avoided some of the mistakes it has made in the last 12 months. The other rumour floating about is that institutional ownership has jumped 10% during the recent period of high volume - I don't know if this is true or not. But in the spirit of altruistic rumour-mongering I would point out that where an acquirer expects resistance from management it often buys secretly on the open market until it reaches 5% at which threshold it must report its holding to the SEC. At that point I believe it is obliged to declare its interest. Once it declares an interest in acquiring a controlling interest it must offer all shareholders the same price for their shares. But the first 5% can be bought on the cheap. COMPAQ would be vulnerable to a determined acquirer. It has $3 billion cash (?), $3-4 billion in marekt value of CMGI and perhaps another $2 billion in other liquid securities. An acquirer would calculate that all liquid securities could be converted to cash after the acquisition (and after any lock-up period on CMGI and AV expires); in fact it could re-negotiate the CMGI deal - giving back the CMGI shares and the remaining 17% of AV in exchange for cash. I am sure there are other valuable assets that an acquirer could strip out of COMPAQ for cash. On the other hand the Philips rumour could be a distortion of another rumour. I remember a couple of months ago when we were speculating about a deal with a telecom that Philips was mentioned as a possible strategic partner on wireless or hand-helds. Mayeb COMPAQ is in talks to acquire Philips and manufacture electric razors and kitchen mixers.

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