ALU - Allou Health & Beauty: Another Web Play Message Board

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Technology Stocks : ALU - Allou Health & Beauty: Another Web Play

ALU 3.460

0.0%

Mar 3 4:00 PM EST

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To: Pat who wrote (228)	2/17/1999 11:12:00 PM
From: Questerr	Read Replies (2) of 418

Not wild about the way the stock reacted today. Dropped 1 1/2 on 129,000 shares traded. I know investors typically sell on the news, but a 10%+ drop on a value/growth company seems a bit unreasonable even in today's rough market. I also have some not so great news about the IPO. Looks like the co. is facing the prospect of doing a private placement that may at some point turn into an IPO versus doing the IPO outright. I have been told they are leaning towards the first alternative. If they do the private placement first, and in turn give the IPO to a top-notch underwriter, we as shareholders of ALU will get about 20% of Fragrancecounter. If they go to a lesser known underwriter right off the bat we will get our 83% (after deducting for the 17% for Jacob's loan conversion) and it will be further reduced by whatever dollar amount they need to raise by selling to the public via the spin-off. Under the first scenario the co. hopes after doing a private placement and bringing in some outside talent FC ends up being an Internet company worth $300-$400 million, of which we would own 20%. Under the second scenario, spinning it off through a second tier underwriter might raise $45 million or slightly more, that we would own a greater % of. They think 20% of $300-$400 million (after allowing the venture capitalists sufficient time) might be worth more than what we would get today. I think the company is mistaken if they think FC and CC would only fetch $45 million in today's "hot" receptive internet capital markets. Unfortunately they have had discussions with some Wall Street firms and they are the ones floating these numbers about. I say go public via the internet and screw the investment bankers. ALU has 2 different constituencies management serves, the Value investors (long-term shareholders) who have served them well over the years, and then the more sexy savvy internet investors (attention span of nano-seconds)who want extraordinary growth results overnight. The value investors see FC as a drag on earnings, and not the reason why they bought the stock, while for the internet crowd it is the ONLY reason we bought the stock in the first place. So if you want the spin-off as I do and not the private placement, voice your concerns to the company before they give our company away to some venture capitalists and it will be years before we see a nickle from FC. VC firms usually hold onto their positions for 2-3 years before they go public. Let's all speak up and be heard.

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