kcmike:
Any idea how many shares outstanding Spinco may have?
If you're a QCOM shareholder, the number of Spinco shares is irrelevant right now. The key, at least for the pre-IPO period that we're in, is what market cap gets assigned to Spinco by Goldman and Lehman, and what % of Spinco actually gets IPO'd. But you can get some idea as follows.
(1) At this point, we know that less than 10% will be sold in the IPO, and 90%+ will be retained by QCOM for distribution to QCOM shareholders around April 2001.
(2) Final IPO price will almost certainly be under $40 and probably nearer to $30.
(3) Assign a market cap to Spinco of around $20 billion - this is the mid point of the range being bandied around and about where I'd place it after only a quick look.
(4) At an IPO price of $40 there'd be 500 million shares outstanding, with something under 50 million in the IPO and over 450 million for QCOM shareholders. At around $32 IPO price, there'd be 750 million shares outstanding, under 75 million IPO'd, and over 675 million for QCOM shareholders. But either way, under 10% of the Spinco market cap will get sold as IPO shares and over 90% of the market cap will be retained for shareholder distribution.
A more definitive S-1 registration will get filed at least 5 weeks prior to the IPO date, and will specify the number of shares to be sold/retained and the initial IPO price. With an October IPO scheduled (market conditions allowing and it's a tricky time to go to market), we should see this S-1 by the end of August or first half of September latest.
That will place some kind of firm floor under the Spinco IPO, and all you need then is a an idea of what market cap the street will assign the remaining QCOM. With the numbers being thrown around, that should be at least $40 billion, valuing the combined package at least at $60 billion, or $75/share for QCOM. Factor in some good news on QCOM and a more optimistic IPO pricing and you can easily get to $85-$95. Worse case scenario would be a continued slide in QCOM that the IPO compensates for.
Where else in the tech world can you find a virtually risk free investment with a potential 50%+ upside? I'm in with an initial trading position already (on top of a core holding), I intend to add if QCOM picks up steam or at the latest when the revised S-1 gets filed.
Remember the COMS/PALM IPO - similar initial market cap splits, if you got in early with COMS at the initial IPO announcement in 9/99 under $30 you made a bundle, and even getting in when the IPO details were filed on 1/28/00 with COMS still under $50 you still did OK. Now's the time!
David T. |
