CTC,
Indeed, final ROIC will depend on the terms and conditions of the deal. However, my understanding was that GTW has a comparable ROIC to DELL at present and was expecting that DELL would have to pay a premium to acquire GTW, resulting in the drop. I do agree that as long as the returns excess WACC the investment is fine, but I would prefer DELL to invest in that particular investment(s) where returns are the highest (server and storage). :-) But I do appreciate your position that this would be more a strategic move than an investment, as an independent GTW may be worth much less than a GTW in CPQ's hand (for example) and hence worth paying for.
A question about the bonds. As interest rate goes up, bond prices fall. Hence they become more attractive investments vis-a-vis stocks, so investors sell stocks and buy bonds, till bond prices rise and yields fall to such levels that stocks again become attractive investments. However, it seems that presently investors are selling stocks and selling bonds at the same time. Where is the money going to go, then? For now, it may hide in money-market accounts, but sooner or later (may be when the long term yield hits 6%) it has to come out and get into bonds, which should push the yield down and prices up, making stocks attractive again.
Does this analysis make sense?
-BGR. |
