John,
The one I feel I need to be prepared for from the starting gun is a poor IPO. My strategy in this case will depend on whether QCOM holds up(CaseA), indicating QClassic is being valued relatively well and SpinCo is not, or QCOM drops along with the IPO'd shares(CaseB), indicating neither is well thought of. IMHO, that is the case today, or we would not be at 59.
In CaseA, I would load up on SpinCo shares. SpinCo's numbers do not look good here and possibly next quarter, but the 1X rollout should be very good for their volume and more importantly for their ASP's and hence their margins.
In CaseB, I think I'll need to evaluate how much more dominant I want QCOM in my portfolio. Probably go the options route, with the strike and month dependent on how far we fall and what kind of reasoning is given, if there ever is such a thing. When QClassic's financials are evaluated detached from SpinCo, the steady and stellar growth trajectory should be obvious, even glaring. There has been no 'Slump' at QClassic.
That is the thought I've put into a poor IPO. A really stellar IPO and I'm sitting pretty. I'm not a big fan of comparing this situation to Palm/3Com, because A) The crown jewel is being left behind, not spun-off, and B) SpinCo is a very, very good company too. That said, if there are arbitrage opportunities, I'll take advantage of them. I don't have a strategy going into the IPO at this time, other than being very long QCOM.
Cooters |
