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Technology Stocks : Compaq
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To: marquis103 who wrote (78442)2/17/2000 9:51:00 AM
From: rupert1  Read Replies (1) of 97611
 
Russ:

One of the reasons CMGI bought Alta Vista was that it needed to balance its revenues from passive investments with revenue from operations. Otherwise, CMGI would be classified as a mutual fund. Alta Vista was not to be a passive investment but active operating ownership. CMGI would operate Alta Vista and earn revenues and thereby avoid the problem. So after AV becomes a public company CMGI will need to continue to own and operate it. I don't know what percentage it needs. I would have thought that it could spin off or sell some more but must retain at least 51%.

One of my subsidiary arguments has been that given the urgent need for CMGI to acquire an operating company, COMPAQ could have got a better deal maybe got cash or more cash than it did - or could have sold the whole of COMPAQ to CMGI. This would have been good for COMPAQ shareholders and would have given CMGI much more a margin of error for its SEC requirements.

The bottom line is that for COMPAQ - the CMGI and AV holding is tied up in a number of ways. First there is the restrictions on COMPAQ on the sales of the shares, then the restrictions on CMGI on the quantity of shares in AV it can sell, then there will be new restrictions on when COMPAQ can sell its shares in AV after the spin off.
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