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Technology Stocks : SFNB, Security First Net. Bank
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To: t36 who wrote (334)3/9/1998 11:22:00 PM
From: Oeconomicus  Read Replies (1) of 507
 
Sue, I see the reaction as partly "buy the rumor, sell the news" and partly disappointment that the price wasn't at the top end of the range management gave. They said early on that they may accept a lower price than the $15-30mm they expected if they got ongoing data center business and other opportunities for revenue out of the deal. This is what they did. $13mm sale price plus $6mm of software and service revenue plus future, ongoing data center revenue plus an equity investment now and maybe more later. Looks like a good deal to me.

And in case anyone is doubting the seriousness or long-term nature of the equity investment, remember that with privately placed stock they can't just turn around and sell it. This illiquidity, together with the fact that SFNB wasn't trading anywhere near the price they paid until the end of January and didn't break above that level until last Wednesday, explains the price. No sweetheart deal to unload the bank (in case anyone was thinking that).

They did what they said they were going to do. Those who were expecting a windfall may have been disappointed and sold after the news. Obviously, somebody saw value because we recovered much of the lost ground and are still above where we were a week ago. They now have another very large bank (Royal Bank) as a customer for software and the data center (and already live online), signed Republic NY last week, and can concentrate on the real business now. All positives as far as I'm concerned.

Bob
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