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Technology Stocks : Ciena (CIEN)
CIEN 202.50+0.8%Dec 2 4:00 PM EST
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To: sydney who wrote (8114)2/19/2000 7:16:00 PM
From: jghutchison  Read Replies (2) of 12623
 
"Why would a company purchase another company with its stock price so high at the moment"?

Good reasons.

1. Stock is the currency of choice when making acquisitions. If you don't have the shares in the treasury, then you simply authorize more - just like Uncle Sugar.

2. A high market valuation is just like a fat wallet.

3. If you are careful and execute well, you can absorb another company to broaden your market share and take out competition, or broaden your product slate and make for a more appealing product with one-stop shopping.

4. You can also due all this without diluting earnings/share.

5. Finally, if you are overvalued and everyone knows it, you make an acquisition just to add real assets, before the dirty stuff hits the fan. Just like AOL.

Neat huh.

Jack
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