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Technology Stocks : NovAtel - Global Positioning Systems
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To: David Rubin who wrote (133)4/14/1998 12:19:00 PM
From: Philip Benson  Read Replies (2) of 191
 
FWIW:

I don't disagree with encouraging NASD or the SEC to look at this turn of events, particularly given the concomitant nature of these two developments. I do think such requests to regulators are better received if not done anonymously.

While the earnings disappointment is not to be discounted, in any of my conversations with the company they have warned about the volatility of order flow. I think you can surmise from CMW's purchase of NGPSF that they view this as a valuable franchise looking beyond one quarter's numbers. Remember that CMW is inherently a conservative organization so I view their investment (as disappointing as it may seem today for minority shareholders) as a significant vote of confidence.

One reason for keeping NGPSF as a separate public entity is to maximize the multiples usually accorded to "pure" plays. How much value would Bell Canada get for Nortel if they owned 100%. BCE historically has traded with utility stock multiples while NTL has commanded high-tech growth multiples. CMW, given its large cash position and military business will arguably not get as high a multiple valuation as NGPSF may be able to garner given its new deep pocketed investor.

Philip
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