Auntie,
I admit my discreet logic bias, but i don't see that much competitive overlap between the two, even with symphony and softimage DS. But I am oh so sad about the discreet's mis-steps.
RE Prudential, there was the famous "prudential has been an underwriter w/in the last three years" hedge clause on the report from today.
The last major acquisition comment was about digidesign, but my comment about screwing up the company was hearsay. I'm not sure what caused the losses in 1995/1996.
Acquisition accounting is the last great shell game, but there are limits.
Let's keep the following in mind, Softimage is a $35million/yr money loser with modest growth expectations. if avid works magic, it could grow to $50 million next year and generate 10% operating margins, fully taxed that's $0.10 per share. Increased share count and reduced interest income equate to a $0.25 per share hit.
Now for the fun: No matter how aggressive they are, they can't one time charge the whole thing. If they're aggressive they write off 1/2 and if they're really aggressive with the amortization they write off the balance on a blend of 5 and 20 years. Unless they work something wild, you're looking at as much as $0.40 to $0.70 dilution for the next 5 years. If that's the case, then the stock is going to get clobbered.
I know a few analysts are in their offices bewildered about what to do with their estimates and frustrated that the company won't return their calls to explain what to do with their models.
Fact: institutions run away from dilutive acquisitions even if they make sense.
Robbie Stephens hasn't said anything yet, Rossi loves the thing. Perhaps joining the midcap 400 tomorrow will help the stock.
I find this deal odd.
TD |
