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Technology Stocks : Digital Equipment Corp. (DEC)
DEC 15.31+1.6%3:59 PM EST
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To: Mike V. who wrote (2686)1/8/1998 6:24:00 PM
From: George Dvorsky  Read Replies (3) of 3276
 
Mike V.,

1. The missing $7 is comming from the sale of the Networking business (a break-even asset) and from the sale of the fab (a money losing asset). Although the settlement is now in question, Mitsubishi and Samsung also have liscences to make the Alpha. Intel does not own it.
It would more likely IMHO that the Chips and Tech. deal is threatened.
The cash holdings figure to be over $20.

2. Intel helps Alpha by guaranteeing that someone will be fabbing the Alpha for the next few years. Untill the Intel settlement, an IBM, HP or other computer company salesman could (AND many times DID!) go to a prospective DEC customer and question whether the Alpha would be around in a few years. Now DEC can respond "YES, INTEL guarantees it!

As for shorting DEC, I have held (and made money) with DEC puts in the past. Wish I had some when it was 76 1/2 or even last November. But now? When you add up the Service Business, the Intel discounts, the networking discounts, new credability due to the Intel deal, the next rev. of NT and the bleeding having been stopped at the fab, DEC doesn't have that far to fall.
Add to that the always present possibility of a takeover (even a serious rumour could start some short covering), and there are easier fish to shoot in smaller barrels.

gd
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