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Technology Stocks : Qwest Communications (Q) (formerly QWST) -- Ignore unavailable to you. Want to Upgrade?

To: Larry Livingston who wrote (4844)	8/5/1999 2:04:00 PM
From: Harry J.	Read Replies (1) \| Respond to of 6846

Larry, you said, ". . . The only reason not to pursue this strategy [of shorting QWST while holding USW] would be if they wanted to own QWST." USW investors aren't the only ones who could play this. Depending on where the "Conversion Ratio" ("CR") is likely to be, QWST longs could buy USW instead of more QWST prior to the conversion and receive more QWST shares at conversion than they could buy outright now. If I read QWST's Form 8-K information correctly (a monumental assumption on anybody's part)-- IF QWST is above $39.90 at conversion, the CR is 1.72932 shares of QWST for each share of USW. If QWST is at or below $39.90 but at or above $28.26 at conversion, the CR is $69 divided by QWST's Average Price (see my earlier posting today re: AP definition). If QWST is below $28.26 at conversion, the CR is 2.44161. In other words, today with QWST at $27, 1,000 shares would cost $27,000 plus comm'n. $27,000 would buy about 518 shares of USW @ $55 today. 518 converted to QWST at 2.44161 per is about 1,264 QWST shares, provided QWST is worth less than $28.26/share at conversion. Such an investor would pick up 264 more shares for the same amount of money (not counting the time delay, the chance of disapproval, the chance of regulatory problems, etc.). If QWST's value is, say, $40 at conversion time (i.e., above $39.90), the CR would be 1.72932. Today's 518 shares of USW for $27,000 would convert into only about 895 QWST shares if QWST is worth $40/share at conversion. Such an investor would hold 105 fewer shares of QWST after conversion from USW shares purchased to day than would be held if the same amount of money was used to purchase QWST today. I guess that means those of us with a five to ten year horizon (ok, more than one year) would like to see QWST's price remain below $28.26 and are likely to buy USW instead of supporting QWST's price which puts us on the same side as the arbitrageurs. Is there an identifiable group who'd like to see (a) the deal go through with QWST's price above $39.90 or (b) the deal not go through at all? Would they outnumber the rest of us? Wouldn't (a) and (b) be working at cross purposes, thus making the deal more likely rather than less likely? These are the times that try our souls, and I am supposing that our alternatives, descirbed above, won't become clearer until we get closer to a potential closing date. Just my non-professional ruminations from over here. Go read the 8-K, filed with the SEC on July 20, 1999, and its Exhibit 2 - the Agreement and Plan of Merger dated as of July 18, 1999, particularly section 2.01(c), and check my (a) math, (b) comprehension, (c) conclusions. Certainly don't rely on me. I don't do this for a living. Regards, Harry PS - If I'm really wrong, please tell us all.