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Technology Stocks : QUANTUM
QNTM 7.260-1.7%Nov 17 3:59 PM EST
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To: Sam who wrote (8528)3/1/1999 10:46:00 AM
From: john dodson  Read Replies (3) of 9124
 
Re: "The reason it is bullish is because the whole company is valued currently as a drive company. When it is split, the drive part of the stock may well be worth less than the 18-19 dollars it is currently trading for. But the tape part is certainly worth substantially more than that, the main risk right now being their impending transition to SDLT and the emergence of new competition in the field."

Here's what I'm thinking. Since current QNTM shareholders get 1/2 share of the hard dd business, and 1 share for the storage business for each QNTM share, that means that each have to be valued accordingly, in the same manner that occurs with a stock split. For instance assume QNTM is trading at $20 ($19 1/2 at the moment, but for simplicity's sake).

The 1/2 share for hard dd would be valued at 0.5 / 1.5, or 1/3 of QNTM's current price. In other words 0.333 x $20 == $6.66 per share. The 1 share for storage business would be valued at 1.0 / 1.5 or 2/3 of QNTM's current price. In other words 0.666 x $20 = $13.33 per share. So, if you have 100 shares of QNTM now, you'd get 50 shares of hdd, valued at $6.66 (assuming QNTM is $20), and 100 shares of storage valued at $13.33.

Not a bad deal if the hdd shares don't fall through the floor.

-John
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