Gabard, I respectfully disagree. With fair market valuations, based on projected earnings, FAMH should not have a problem with maintaining at least that share price. Remember, the conversion works both ways. If the conversion is 4 to 1, then the eps is converted as well ( not as neatly due to slight dilution ). If their '97 eps on 20 MM shares was .11, then post merger it would be .36, and that was when the company had only 8.5MM in revenue. The Myriad acquisition will finalize next week according to the president Ira Monas. Myriad had 1.8MM in net for '97. If my math is correct, the new share count after the merger will be around 12MM.
With the added revenue of Myriad, their expanding IT efforts (contracts for IT placements with Allied Signal and Deloitte & Touche), even if they only made the same net as last year, with only 75 percent of Myriad's '97 net, that gives with 12MM shares .30 eps.
At industry multiples, it would easily maintain and exceed that price.
Why am I willing to do the conversion? Because the chances that the company has to be fairly valued based on projected earnings is much much higher on the bigger exchange IMO. Yes, my share count will instantly dwindle by 75 percent, but the eps of the company will likewise increase nearly 400 percent. Again, the conversion works both ways. The float will similarly decrease by nearly 75 percent.
Jin. |
