ChecknIn, it would seem that there has been insider trading on both NETA and TISX judging by the behavior of both stocks last week, but it's very difficult to keep merger news private.
Judging by the reaction of the market, the deal seems to be viewed positively. However, NETA is down a few points from it's recent high, so the effect of dilution may have already been built in to the price. I don't know anything about TISX, but I'm assuming that they must have some pretty impressive technology because they sure haven't wowwed anybody with their business performance to date. If so, this could be a good merger because Larson and company are geniuses at marketing.
I would expect the overall dilution to NETA to be minimal judging by the respective capitalizations of the two companies. It is also clear that NETA's strategy is to consolidate the fragmented computer security business, and they are staking it all on the success of the Windows NT platform. Now this may or may not be wise. Certainly, Windows NT will replace other platforms if for no other reason the fact that Microsoft is pushing it so hard. On the other hand, if Microsoft becomes interested in the security niche it could squash NETA like a bug -- witness what happened to Netscape.
Nevertheless, I remain quite bullish on NETA. Considering it's rapid growth, good looking financials, and proven marketing savvy, it is selling at a relatively low P/E. As it swallows more and more companies it may become much less risky because it will have offered an integrated suite of products (assuming the mergers mesh well), and eliminated potential competition at the same time.
Regards,
Paul |
