Victor ... About AV
>>>The history of IPO's in 1999 suggests that it would have raised more than $2 billion and after the IPO the value would have continued to rise.<<<
Now, I don't understand your argument. CPQ realized more than three times your estimated $2B. Presently, CPQ own:
- 41.6M shares of CMGI, Market Value ~$5B and rising.
- 18.5% of AV
In addition to the tremendous amount of money they got from this deal, the strategic alliance with CMGI opens several doors for them to be involved in the internet. Already, we have seen a deal involving CPQ, CMGI, and SII in china. Further, with the tremendous growth in the internet, CPQ will benefit greatly from being the preferred supplier of hardware and services for the 120 internet companies (going to 250 companies) controlled by CMGI.
In all your discussions of AV you never seem to address the main topics at the time they made the CMGI deal. At that time, they were losing money on their operations (-$184M in Q2-99), S&P lowered their credit rating, they required $700M to $900M for restructuring, and their balance sheet was weak. In a word, it was a matter of survival. Clearly, the CMGI deal helped the company to survive and gave them the financial strength to be able to straighten out their problems.
Presntly, their balance sheet is very strong which allows them to spend money as needed to fix their operational problems (e.g.; the acquisition of ICO distribution biz for $370M). IMO, the CMGI deal saved the company. Your argument and others that the shareholders would have been better off with an AV IPO by CPQ is totally out of sync. |
