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Technology Stocks : Compaq
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To: PCSS who wrote (45488)1/27/1999 6:51:00 AM
From: rupert1  Read Replies (1) of 97611
 
Good morning, Michael. Ready for action in about ten minutes.

I am amazed at all the confusion about what has actually been announced about AV. Let's summarise.

1. There will be an IPO when all the pieces have been put together, probably in a year.

2. CPQ will retain a controlling interest in the new publicly traded company. But it has not been decided what equity position it will retain.

3. Nothing has been decided about giving or not giving CPQ shareholders an equity position in the IPO.

4. The reference to "unlocking value for shareholders" does not imply anythng except that the deal will be beneficial for CPQ shareholders.

5. CPQ will spend a limited amount of its own money in getting AV ready ($60 million)

6. The new AV will use some of the money raised in the IPO to fund its own development including acquisitions.

7. The figure of $2 billion has been discussed but not as the total market capitalisation of the new IPO, but as the amount of money raised which will be disposable.

8. The deal with Microsoft gives AV users a free e-mail service (hotmail) and eventually a free Instant Message (IM) service when Microsoft introduces its IM service. An IM service is one of the most attractive features of AOL.

In my opinion, the reasons CPQ have not decided about the equity structure are:

1. To maximise market conditions closer to the time of the IPO.

2. To hold in reserve the possiblity of giving equity participation to major partners who would be contributing content
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