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Technology Stocks : COM21 (CMTO)
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To: pat mudge who wrote (1785)2/20/2000 5:07:00 PM
From: Redfisherman  Read Replies (1) of 2347
 
I continue to ponder the investment implications of the 3,000,000 warrants of TERN stock given to Shaw with an exercise price of $6.50/share. If exercised and sold at Friday's closing price of $232, the capital gain would amount to a tad over $675 million. Shaw's market cap is only a little over $4.5 billion. Their revenues for the past 4 quarters were a little over $725 million. I find these comparisons staggering! And on top of that, I seem to recall Shaw has ATHM warrants/stock too. Although I have to confess Dan B.'s points have me considering TERN as a short term investment more seriously than I had previously, I can't help but think that Shaw might be the better TERN play at this point. Certainly from a TA standpoint, TERN needs to consolidate a bit before I'd be comfortable jumping on board. SJR, on the other hand, is in the middle of a very nice looking up channel. From a FA standpoint, I'm not sure how to factor these unrealized capital gains into any sort of valuation model. They are pretty much one time gains so I suspect they must be discounted somewhat vs more standard forms of revenue. Still, they are ENORMOUS! Is anyone else out there thinking along similar lines? Are there other analogous situations from the recent past with other companies (where the company's capital gains was comparable to the revenues from their main business) that might provide a clue to how the market will ultimately value this?

ps I'm still long on CMTO and the TA picture is still looking strong indeed (though I suspect that is obvious to all at this point)
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