08:37 ET InfoSpace (INSP) 1.32: Company announces the repurchase of 21.7 mln shares from Vulcan Ventures at a discount to the current trading price of InfoSpace stock in a privately negotiated block transaction. InfoSpace plans to retire the repurchased shares.
Looks like Paul Allen is out. On the plus side, it means earnings, when they come, will be less diluted by 6.7% on a per share basis. And, now is the time to buy shares, when the price is low.
Still, leaving aside a debate on the merits of having Paul Allen involved in INSP, it sure sends a message that he doesn't believe the share price will be moving up anytime in the near future. Then again, I don't think he's always been the master of buy low, sell high...
Edit: here's a snip about another PA investment taken from the GX board: Message 16317652
Paul Allen invested $1.65 billion in RCN in February 2000. Current value: $100 million.
Paul Allen, a cofounder of Microsoft, builder of the Jimi Hendrix museum and one of America’s richest people, rocked the telecom world when he wrote a huge check to little-known RCN, which sells broadband services to residential customers in competition with entrenched local phone and cable companies. Allen said RCN would be central to his wired-world investments. Timing is everything, and Allen’s timing was terrible. His check cleared just before the stock bubble began bursting. Alas for Allen, his high-profile investment guru, Bill Savoy, was also outbargained by low-profile David McCourt, RCN’s chief executive. Here’s how. Like many big investors, Allen didn’t buy plain old common stock. He bought preferred stock—which carries a dividend and ranks ahead of common stock in its claims on a company’s assets—that was convertible into RCN common stock at $62 a share. This means Allen can trade $62 of preferred for a share of RCN. That looked great when RCN soared into the $70s. It’s not so good now, with RCN kicking around at about $4. Normally, owning preferred stock rather than common offers some protection against such a price collapse. That’s because you collect cash dividends on your preferred, and you can get your original investment back in cash when your preferred matures. Not so with Allen. His dividends are paid in new preferred shares convertible at $62, not in cash. Worse, when Allen’s preferred matures in 2007, McCourt has the option to force him to convert it to RCN common at $62, rather than getting his $1.65 billion back. Barring some miraculous recovery, Allen will get 26.6 million RCN common shares, currently worth about $100 million, instead of getting his $1.65 billion back. Assuming, of course, that RCN (whose common holders include me) survives that long. Bonus lesson: read the fine print. |
