Are 'rumors of RNWK's merger prospects greatly exaggerated?!!'
In view of today's XCIT/ATHM blockbuster, thought I post a copy of my recent Yahoo message on the subject of RNWK merger speculation. This subject is swirling over there. Comments?
BAM
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The compelling business reason for a merger would be RG's interest in building something *orders of magnitude* larger than Real could otherwise achieve in a reasonable time frame, and a bet that hitches his star to someone else's 'currency'.
Not saying it *will* happen, but it certainly could. In the end, Glaser must either decide that RNWK is an acquirer (CMGI model) or an acquiree (NSCP model). What will probably govern this decision is the multiple placed on RNWK. If he can get it high enough, he has a window. Doubt he would do anything with debt.
If the former, then look for signs imminently. (There are probably 25 niche firms, mostly private, that RNWK should be buying. WinAMP's parent, Nullsoft, Inc., and MP3.Com/Zoo, Inc. are the first two on my list). Whom would you guys want RNWK to buy?
If the latter, who knows?
As an alternative to outright acquisition, consider this. What about a big RNWK investment by Softbank or CMGI rather than an operating company? For example, Softbank put $400 million into EGRP last summer (maybe 27-28% ownership at about $25.50 a share). Did the same sort of thing with YHOO (ownership up to about 30 percent). Are these "acquirees" on a roll now, or what?!!
I don't find this subject the slightest bit premature, and any RNWK friend, pundit or investor should be paying close attention. This thing is as hot as a Pentium III and faster than a speeding bit.
And keep your eye on sentiment: RNWK's August *$90* calls traded as high as $18.00 (!) on Friday. (For those new to options, that means investors expect a share price higher than $108 by the third Friday in August.)
1999 will see some unbelievable consolidation among Net players. Is RNWK "in play?" Discuss!
BAM |
