Semtech Message Board - Msg: 2354305

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Technology Stocks : Semtech

SMTC 72.89

-8.6%

Dec 12 9:30 AM EST

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To: Jeff Bond who wrote (290)	10/4/1997 1:32:00 AM
From: Todd D. Wiener	of 886

Jeff- The reason that SMTC didn't drop on the announcement of the acquisition is that it will be immediately accretive. Frequently, stock-for-stock transactions are dilutive in the short-term, and the stock drops on the announcement. In either case, the acquiring company's stock may drop if the smaller company's stock is publicly traded. That's because of risk arbitrage, wherein people short the acquiring company and buy the smaller company. Since Edge is private, arbitrage is not possible. I'm quite impressed with the growth rate of Edge, with a tripling of revenue over the past 2 years. I'm eager to see the S-3. Because SMTC will be taking a charge of about .11 in Q3, the analyst consensus should decrease to about .36 from .47. When the Q3 report is released, the results should include pro forma financial and operating results for both SMTC and Edge, so SMTC may beat estimates of .36. Todd

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