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Technology Stocks : SDL, Inc. [Nasdaq: SDLI]
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To: djia101362 who wrote (2400)7/26/2000 4:57:44 PM
From: Gerald Walls  Read Replies (2) of 3951
 
I think my math is fine. The discount is calculated like this.

You compute discount or premium by dividing the current price of an item by what it "should" be. Hence:

SDLI / (JDSU * 3.8)

390 / (138 * 3.8) = 0.7437

So SLDI is trading at 74.37% of what it "should", which is a discount of 24.63%.

What you're computing is the additional percentage profit that would be made if you own SDLI instead of JDSU and the merger goes through. This isn't the same thing. With your equation you can have discounts of over 100%, which isn't possible:

(100 - 25) / 25 = 300%
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