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Technology Stocks : C-Cube
CUBE 36.29+0.7%Nov 18 3:59 PM EST
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To: Stoctrash who wrote (14754)4/30/1997 8:15:00 PM
From: robt justine   of 50808
 
FredE: I agree with John R. regarding the necessity of changing the accounting treatment of ESST's acquisition of Platform Tech from "pooling of interest" to "purchase". About a year ago the SEC put out a bulletin regarding what they felt were false interpretations of SEC regs for tax treatment of acquisitions while share repurchase programs were in effect. Several corporations either quickly terminated their stock repurchase programs to maintain the validity of the pooling of interest tax treatment or kept the programs and changed the accounting method of acquisition to purchase. Cisco is one that comes to mind that terminated its stock repurchase program.
Regarding your suggestion that CUBE institute a typically CUBE "stealth" share repurchase program with no public announcement, I believe that this is a non-starter. Two primary requirements other than the 10b-18 rules monitoring the actual procedure for the open market share repurchases are Board approval and public announcement.
Although public announcement is not expressly mandated by the SEC in the regs, no corporation to my knowledge has ever attempted a share repurchase without announcing to the public. Specifically, it is commonly thought that by NOT announcing and entering into a repurchase which would be considered a material event could possibly run afoul of the "manipulative and deceptive" practices section
of the regs.
By the way, from a business standpoint, IMHO it might be considered somewhat questionable for a company of CUBE's size at the current inflection point of their developing markets to divert resources from their operations to holding their stock price on a firm footing.
For this very reason, the ESST move the other day appears somewhat dubious. With $48M in cash, why deplete reserves with a stock repurchase. My guess is that they never complete more than 500k of the 2M shares they announced in the repurchase.

PS: I believe the IBM repurchase was announced. Will check.
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