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Technology Stocks : Intersolv News
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To: Michael L. Busser who wrote (923)6/29/1998 11:21:00 AM
From: Arrow Hd.   of 1069
 
A lot of us share your disappointment. Some of my associates sold out
when the Arbs started shorting MIFGY. We experienced the same
downdraft a week or so earlier with BAY. I too lightened up but
last Friday bought back the position when the spread hit the 20%
area. My associates also did some buying. At this price I would tend
to vote no too. We control tens of thousands of shares but it is not
an amount that will turn the tide. Anyway, I think we will check in
with ISLI and find out what they are willing to say publicly. If
neither of these firms can come up with some good publicity about this
combination then I think what will prevail is the general Y2K scenario
of lowered PEs which weighs on MIFGY and keeps it here in the mid 30s.
That would mean ISLI is stagnant money and will discourage even more
investors. If the deal falls through I would expect that ISLI would
fall temporarily but then take off to the 19 area. My reasoning is
that the MIFGY deal shows ISLI's willingness to be acquired but not
at MIFGY's price. So they will shop themselves around at a higher
price with terms and conditions far more favorable than what we saw
with MIFGY. And with improving fundementals and the Y2K problem only
getting worse the stock could get into the low 20s on its own. The
positions we have that are long term oriented will not be unloaded
under any scenario other than a favorable take-out which is defined
as something in the mid-20s at the least. Another point to ponder is
the fact that the Y2K problem is causing a shift in resources and
budgets from current projects of networking, internet, application
development, etc. to fixing the Y2K problem. I posted on another
thread a while back how in 1999 some sectors of the IT industry will
have a short term "recession" as the projects they sell into get
deferred while the Y2K problem is fixed. ISLI is perfectly positioned
to weather this storm. Their application tools may suffer somewhat
but that will be made up with Y2K business. Companies like ISLI may
be the only IT stocks that dont experience a short term downturn in
business sometime during the next year and half. So to sell out now
at 16 and change is dumb unless they really feel that owning MIFGY
over the next two years as a combined company is better than just
being ISLI. Personally, I think they can do a better deal and if
ISLI thinks otherwise, then they better start to communicate that
reasoning.
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