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Technology Stocks : Lycos
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To: zalesky who wrote (1419)1/24/1999 4:08:00 PM
From: Ted Shelton  Read Replies (1) of 2439
 
To VV and Z: Have to agree with both of you... Shorting Internet stocks is far too dangerous with the small floats these stocks have. The stock can start moving and get away from you VERY fast. Take it from me, I've been burned good :-)

But at the same time, I have to agree with Z that a takeover by a traditional media company doesn't make sense right now given the rapid run up in the stock price. ATHM can afford to purchase XCIT (for an exchange in shares) because their stock has exploded as much (actually more) in the last few months as XCIT's... So it is a trade of one over-valued equity for another (perhaps equally) overvalued equity. Right or wrong, the folks over at TWX et al have to be thinking that their stock is NOT overvalued by comparison to the Internet stocks. By any fundamentals measurement (which all the I bankers will rush in to offer) a stock trade between a TWX and a LCOS is not going to be equitable. And with the incredible volatility that these issues have had, it makes an enormous amount of sense to wait for the next dip in the road. LCOS will assuredly go down a lot faster than TWX if consumer and investor confidence fades due to some macro-economic issue.

So where does that leave us? If LCOS is going to get an investment or buyout offer in the near term, it will have to be from another company that has had an equally large run-up over the last few months, so that shareholders and investment bankers will all feel that there is a common currency between the two stocks. The only two companies that make sense to me are AMZN and YHOO -- both big enough, with large enough run ups in stock price, to easily swallow LCOS.

Can anyone come up with another example?

Anoher choice would be a company so large that they don't care how much they pay :-) say MSFT... but would they do it with the DOJ case hanging over their heads?

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