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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 170.87+1.7%3:43 PM EST
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To: Kayaker who wrote (88258)11/26/2000 7:12:33 PM
From: Don Lloyd  Read Replies (1) of 152472
 
Kayaker -

...So after the spin-off, I would have a certain number of Spinco shares. Any idea what is most likely to happen with the QCOM shares? In my example, 1000 shares of QCOM at 120 before the spinoff would become 900 shares at 120? Or would I still have 1000 shares at a price of 108? (120 less 10%).

The reason I ask is that I have a Canadian tax free retirement account (RRSP) that is allowed 25% (soon to be 30%) foreign content based on the book value of the shares. Hopefully this won't adjust the book value up.

No, the initial spinoff will only be for about 10% of the issued shares in the spinoff. You will still have 1000 shares of QCOM. For the QCOM price to fall by $1 per share due only to the separation of the spinoff assets, about $750M would have to be the value of the 10% spinoff, or $7.5B would have to be the total valuation of the spinoff. In practice, the market is unlikely to make a rational calculated valuation, but its valuation is the only one that counts.

I wouldn't expect the total book value to necessarily change.

Regards, Don

Edit - I see that all my explanations were incorrectly for a situation that the 10% spinoff was distributed to shareholders when in fact they will be sold to the public. Ignore my explanations. -g-
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