Disk Drive Sector Discussion Forum Message Board

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Technology Stocks : Disk Drive Sector Discussion Forum

WDC 160.11

+5.2%

3:59 PM EST

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To: Sam who wrote (9189)	12/13/2002 7:48:48 PM
From: Tom Simpson	Read Replies (1) of 9256

Well well Sam.... I'm not sure I understand this correctly, but lets see. Going in we are looking at a company with 428 million shares (fully diluted) with 752 million of shareholder equity. Step one is to have the company return 261 million of capital to its private share holders...about 60 cents per share which probably isn't taxable. Step two is to pay off 147 million of "deferred compensation" .... which probably reflects the effective cost of bribing management to support the original private deal. Taken together this takes 408 million in cash. Step three is to have the company dump 24 million shares at 12, which puts 288 million in cash back in the company's pocket, less the cost of moving the shares. The net intent here would seem to be to replace that 261 million in capital. Going along for the ride are the private share holders who use the occasion to dump 48.5 million shares for another 582 million direct to their pockets. In total they get 582+261 or 843 million .... a little bit more than the book value of the entire company (and they still own what??? about 80% of the company. If I remember correctly, this 700-800 million is about what folks figured they actually paid for it in the first place. Seems to me they shouldn't have to keep the stock price pumped up thru the lockup period. Hell, if they sell out the rest of it a year from now at 6 they still come out smelling like a rose. When its all said an done I think we are left with STX having a psr of .8 and a price to book around 6.5. It won't surprize me to see the stock hit 8 over the next year. Speedreading thru the prospectus I noticed some funny sounding stuff about XIOTECH sale. Did anyone figure that one out? If Bush had cojones he would nominate a certain Arthur Leavitt as chairman of the SEC :o) Best Regards.......Tom

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