Sector posted a link to this Yahoo MRVC msg, but I think it is important enough, from a valuation perspective, to repost here in its entirety.
MRVC currently has around 70M shares outstanding. At its closing price of 58+, the cap is slightly more than 4B. With 153M shares of LUMN (pro-forma, gives effect to shares for FOCI, OIC, and QOI) outstanding after the IPO, even a first-day close of $30 would mean a market cap greater than 4B.
Most of the hot stocks recently have closed first day anywheres from the 40s to triple digits. Do you think the underwriting team wants to price LUMN so it winds up under 30 the first day? I don't.
So although the exact numbers will vary depending on things like how many shares will be issued in the IPO, initial price, after-market premium, and market fluctuations over the next year, the underlying point made by drifter is a compelling one: when current MRVC shareholders receive LUMN shares sometime in 2001 (pending tax-free ruling from IRS), the odds seem to be pretty fair that they will be worth as much as MRVC sells for today.
Guesses, speculation, hopes, opinion....agreed. Nevertheless, IMO the only risk in MRVC over the next year is market risk for technology, NASDAQ, and new IPOs.
BP
<<<stocksarewaywayup
by: a_high_plains_drifter
7/27/00 6:12 pm
Msg: 38379 of 38950
We know that there are 2 shares of Luminent for each share of MRVC outstanding. That's straight from the prospectus, and it's is a fact (I'm not hypothesizing -- see the "Dilution" section of the Luminent prospectus). MRV has 71 million shares o/s, and it owns 144 million shares of Luminent pre-IPO. That's a ratio of 2.03 LUMN per MRVC share.
Now, we know that MRVC will spinoff LUMN to the MRVC shareholders after the IPO, subject to a taxfree ruling from the IRS. Noam just said so on the call.
So, as a shareholder of MRVC, post-spinoff you will own 2 shares of LUMN, plus 1 share of MRVC. At a current price of 58, the market is saying that LUMN is only going to be worth $29 per share, or a $4.5 billion market cap, which is about 28x forward revenues. I can tell you right now that First Boston, CIBC,
Robbie Stephens and the others will put a target price of at least $50 on Luminent post IPO, because that's still a HUGE discount to JDSU, SDLI, NUFO, BKHM, and AVNX, all of which exceed $7 billion in market cap.
So, if LUMN is worth at least $29/share, then you as a shareholder can buy MRVC today at 58, and when you get your LUMN shares, sell them at 29 and recoup all your money. Then you're left with 1 share of MRVC, which you paid nothing for. What's that share worth? Well, with Zaffire, iTouch, Jolt, Hyperchannel, Xuma, RedC, All Optical, Optical Access, Optical Crossing, and nBase, MRVC shares will clearly be worth something. Is the right number $20?
$50? $100? Who knows? I think it's worth $200+, assuming a good market environment and continued strength in the optical netowrking sector. But guess what -- even if I'm wrong, it doesn't matter, because I paid nothing for that share, assuming the LUMN valuation holds up.
These boards are fun to read, because the posts reflect a wide scope of backgrounds and opinions. Bu the naysayers are clearly barking up the worng tree here. They get all hung up on current earnings and "getting allocated shares in the IPOs", when the real story is as clear as day. Oh well, what they view as
disappointment is what I see as opportunity. That's what makes a market. See you at $200. You shorters can cover up there by buying my shares.... >>> |
