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Technology Stocks : Vanstar
VST 167.13-2.5%10:55 AM EST
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To: Mkilloran who wrote (395)7/18/1998 5:30:00 PM
From: Mark Carson  Read Replies (1) of 420
 
trade4livin..agree the pso group is worth more,,,,should be valued at a much higher pe multiple than the reseller business.

IMO they want to clean up inventory before they breakup the company...this could be at the end of the 3rd qtr

In the mean time I think this stock could go lower....
to about 8 ..May 1997 levels.....that's the time to buy.
>>>>

Frankly - I would be more worried about management than the product business. You can take this as 'bitter apples' but I lost my job at Vanstar during a layoff about a year ago. Essentially, upper management felt that Wall Street put a heavy price tag on revenue and services/margin was secondary. As a result, they issued a statement saying 'sell product at any cost'.

In doing that, they lost focus on PSO which slipped and they got eaten alive by the professional distributors. Now, a year later, they are talking about merging or breaking up the company. Not exactly the type of people I would want running MY corporation.

These guys are just not that bright. I spent 4 years at MicroAge distribution and a good year meant profit margins over 1%. Why would you even want that business? Let alone aquire distribution groups and sacrifice your 50%+ margin business for it.

Mark

PS: To Bill Tauscher: 'I told you so'
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