<<downgrades by analysts just C.Y.A.
just 2 months ago, all the analysts boasted such glowing buy recommendations! why there would be unsurpassed growth, market dominance, and yes even profits!
so what happened that made tlc sellout so fast for so little?>>
Paul,
I would venture a guess that the analysts, like me, reevaluated their position due to the pending combination with a zero-to-negative growth retail toy company. Sure there are synergies to be catured with Mattel's software arm.
Howver, TLC will now never return to a software P/E of 25-30 but will instead be awarded a retail P/E of 10-13 by Wall Street as part of Mattel. The growth that TLC experiences will be diluted by the massive size of its parent.
As to why they sold out for so little, I would guess that Lee, Bain & Co. wanted their money back as soon as the eighteen month lockup expired (Remember that they, like several of us who were bullish in summer of 1997, have a cost basis of $10 for a 100% annualized return). Additionally, their probably didn't expect Mattel to crumble as it did yesterday even with the bad earnings news. The accretive nature of the acquisition for Mattel was totally ignored by Wall Street's surprise on the earnings announcement.
OB
BTW - I admit that I dumped the remainer of my shares yesterday after hearing about the deal. IMHO a much better deal would have been TLC buying Mattel's software division and a major cross licensing pact in exchange for a minority stake in TLC. |
