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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: PCSS who wrote (75271)	1/6/2000 9:54:00 AM
From: Elwood P. Dowd	Respond to of 97611

AMD shares reacting quite positively to yesterday's news. El

To: PCSS who wrote (75271)	1/6/2000 10:10:00 AM
From: rupert1	Read Replies (4) \| Respond to of 97611

Michael: I am not sure how that is a better idea. CMGI hopes to raise $300 million. Alta Vista is a privately company owned 82% by CMGI and 18% by COMPAQ. So it would seem that CMGI will float a relatively small portion of its 82% of the shares to raise the $300 million. I cannot see from the announcement that CPQ's 18% will be floated or that CPQ will be a direct beneficiary of the $300 million raised. The $300 million is for use in developing Alta Vista. Any rise in the shares that are floated will go to those who own those shares after the IPO. I still think that COMPAQ should create a subsidiary in which it puts its CMGI and AV shares - and perhaps all its other holdings - and issue shares in that company freely to its shareholders of record on a specified future date. This will encourage holders in COMPAQ to stay long and add value to COMPAQ's share price. As I have discussed before, one potential problem is that the deal with CMGI has locked up the COMPAQ CMGI shares and the AV shares for a considerable time so that neither COMPAQ nor its shareholders can benefit from any rise in CMGI or AV. This would be a barrier to the idea of a subsidary holding company issuing shares. One way around this barrier would be for COMPAQ to renegotiate with CMGI to shorten the lockup period. Assuming that this was not possible because CMGI was unwilling or because there are regulatory or trust or tax or other reasons, then other solutions should be sought. As I have suggested, COMPAQ could create a trust for the CMGI and AV shares, and issue shares in that trust at a future specified date to COMPAQ holders of record. The trust shares could be traded but the holders would understand the risk involved in putting a price on shares whose future value would depend on the the value of the CMGI and AV shares when the lock-up period expired. Some might want to speculate that CMGI and AV would be the same value or higher and others might want to speculate that they will be lower. It would be a nice test of faith in the value of the CMGI investment.