re: csc is worth $130/share
What analysts said CSC is worth $130/share? Solomon Brothers
downgraded CA because they thought CSC was not worth the price
that CA was offering.
To be honest, I forget now. Go back and read the news articles that were released on the first 2 days after the announcement. One guy from Lehman brothers said $120 I believe, another guy [I can't remember the brokerage] said $120 to $145, and a third guy said $130 was fair value for CSC. The reason some are saying $108 is too much is that CSC was expected to report mediocre earnings for the next 2 quarters, which means their stock probably wasn't going to move significantly upwards. So, on it's own, it probably would not have gone from ~ $90 to $107 or so..
If don't mind answering, how long have you held CSC? Do you
think the merger will take place? CA seems to be pretty
stubborn. It might cost them. I read that at the last round
of talk, CSC was willing to be bought out but it would have to
be at a higher price. Could we be looking a compromise of about
$120/share?
I don't actually own CSC stock, I own March 85 calls, to be precise, and I've owned them since November 97.
I believe that CA would very much like to do this deal. I think the reason they are being so aggressive is that CSC was in absolutely no hurry to do a deal with them, and CA is worried another bidder might be rounded up. I'm wondering who that might be. I doubt IBM or AT&T. Perhaps Cap Gemini or debis, from Europe, as was mentioned in the press.
But, although I think CA wants CSC very bad, I believe there is also a point at which they will walk away and perhaps buy a couple of smaller players. That point appears to be up in the valuation ranges cited above, since CA said it was willing to go to $114.
BTW: It seems that CSC is trying to match in arrogance the way CA is being in aggressiveness.
As to whether I think it will get done: The deal makes sense to me. CA needs a service arm to compete with Oracle & IBM as customers are demanding it. But, the two sides are so far apart, and there doesn't seem to be the slightest bit of love lost. To take over CSC in an overtly hostile manner would be a terrible way to start off a partnership. I have to hope the two sides are just posturing.
Anyway, it's turning into a pissing contest, and I never try to predict pissing contests, because you never know when the wind rises up and turns the whole situation around, so to speak.. |
