Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 210.50

+0.5%

Nov 21 9:30 AM EST

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To: Harold S. who wrote (22619)	11/11/1997 11:20:00 AM
From: Gary Korn	Read Replies (1) of 61433

Mr. Spock, CPQ has about 700MM shares outstanding now. They are doing a 2-1 stock split effective 12/31 (I can't figure why they want to split a $60/stock). Hence, they require 1.4B shares. CPQ filed a preliminary 14-C on about October 20. (the 14-C was filed at the same time that the CPQ, ASND and COMS insider sales all occurred...about the same time as employee stock option repricing as well). The preliminary 14-C was updated on about November 6 with data about insider shareholdings. The 14-C seeks authorization to increase CPQ authorized shares from 1B to 3B. One of the stated reasons is to allow for the 2-1 stock split. Another explicitly stated reason is to allow for the acquisition of other businesses (and for stock options). To effect the 2-1 split, CPQ needs 1.4B shares. That leaves 1.6B shares leftover for acquisition purposes (and some for insider stock options).. I'm not good at figuring dilution, so perhaps someone can help me here. If CPQ is worth $60 a share at 700MM outstanding shares, it should be worth $30 a share at 1.4B outstanding shares. The remaining 1.6B shares are going to be used to acquire a business or businesses, so the issuance of these shares is not 100% dilutive. It depends on what the acquired business is worth. Assuming no dilution, 1.6B x 30/share = $48Billion. Now, I'm getting way beyond my knowledge area...Sector Investor or someone else...can you help? Gary Korn

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