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Technology Stocks : Compaq
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To: Andreas who wrote (27904)6/20/1998 10:15:00 AM
From: rudedog  Read Replies (2) of 97611
 
Andreas -
It's not as simple as it looks. Although the 'purchase price' of DEC was unaffected by the CPQ stock price, the valuation of the 'goodwill' associated with the purchase is substantially affected, and may have been reduced as much as 70% because of where the stock happened to land. Also the options conversion of existing and former DEC employees was improved with a lower CPQ stock price, providing an additional bonus to those people at no cost to CPQ.

I am always skeptical of the suggestion that management can manipulate the stock price even if they wanted to do so, but there are lots of reasons why it was fortuitous for CPQ that the price was closer to 28 than 40.
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