PSFT - Fiscal 1998 - Discussion for the next year Message Board

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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year

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Oct 29 5:00 PM EST

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To: V3 who wrote (3541)	11/16/1998 7:36:00 PM
From: L.B.Nguyen	Read Replies (2) of 4509

"I check PSFT's closing price and what do I see? Bid: 0 Ask:0 PSFT not marginable. Then there's some sort of news about several gazillion class A shares being issued to the public. " That was how I felt when I checked DateK. I said to myself "Oh Sh*t, here go another 25% drop"; However, when I read the annoucement carefully, It wasn't too bad. Well this is my analysis: $300M/4.6M shares/50 = $1.3/each PSFT share. According to the company release, you can consider this as a once time payout in term of shares of the new company. It is not dilutive to PSFT because the number of shares of PSFT remains the same. Now you just own two companies, PSFT and Momentum. If the market give a 5X price-to-book value multiple for Momentum then you can look at $6.5 increase in value of PSFT, minus of the cash $1.3/share transferred out, netting ~$5. IMO, the market will give about $2-3 value. The company already said this method is better than giving cash out or share buyback program. The only catch I can see is Momentum better has a higher growth rate than PSFT.

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