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Technology Stocks : CPCI - great earning , BARRON's suggest
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To: PaperChase who wrote (545)6/4/1998 11:10:00 AM
From: csm  Read Replies (1) of 586
 
Paperchase,

The reason the stock buy-back made sense to me was that the company was sitting on a lot of money and seemed incapable of putting it to use in an acquisition. They said for several quarters that they were looking, etc. but never did anything. Given that, and a continuing positive cash flow it seemed (and still does) reasonable to me that they use some of that cash flow to reduce outstanding shares while prices are half or less of what they received for stock at their last offering.

I certainly agree that acquisitions would help. Although I like financially conservative companies, this one may be too conservative for its own good.

Re: someone else's post on synergies, "merge a good manufacturer with a good service company" is where CPCI was headed did by having SGI market and service their arrays. Now, they should be pushing SUN and large NT systems suppliers to do the same.

I don't understand why you say they should use cash and stock for acquisitions while the stock price is low, wouldn't you do that when the stock price is high? I really feel the shares are worth more than $10 going forward, with any capable management so why would I give someone my shares at a discount to do an acquisition.

I like your posts, but I don't remember you sharing your concern when they first slipped, several quarters ago, could be my memory is bad.

How 'bout this one... If SUN was on the ball, they'd buy CPCI (for $25M, net of cash) focus on the SUN and NT connectivity, drop the SGI arrays and keep RaidRecorder. That would be awkward for SGI and give SUN a cheap manufacturing and design facility to build arrays and perhaps other stuff that they could integrate. Just an off-the-wall thought.

Thanks.

Stuart.
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