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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: Dr. David Gleitman who wrote (36946)	1/10/2000 5:21:00 PM
From: SLSUSMA	Read Replies (1) \| Respond to of 41369

I think there were a lot more than just the Digital Merger that hosed CPQ. EP wasn't exactly a stellar CEO and CPQ made a lot of bad moves outside of the DEC deal. I remember CPQ well and remembered bailing out in the mid $30's before it tanked to the low $20's. I did not buy into DEC because CPQ-DEC was not a company that I wanted to own. However, I think AOL-TWX is a company worth owning long term and that is why I made the move to sell AOL and buy TWX today. Turns out I sold AOL higher than the close and bought TWX lower than the close (though not by much). Worked out in the deal itself and especially in the $6k in capital I was able to free up.

To: Dr. David Gleitman who wrote (36946)	1/10/2000 5:30:00 PM
From: David E. Taylor	Respond to of 41369

David: I don't think AOL/TWX can be compared to the CPQ/DEC deal. If you recall, the CPQ/DEC buyout was announced (on 1/26/98) right after CPQ's Q4 earnings. CPQ sold off for a day or so about 10% on the DEC news, but then gained 25% over the next trading week. After that, any arbitrage difference got buried after INTC and then CPQ issued earnings warnings in mid February 1998, events which whacked CPQ from 36 all the way down to 25. It's true that CPQ was in the dog house for pretty much all of 1998, but that was due to their channel stuffing practices for which they ultimately paid the price. David T.

To: Dr. David Gleitman who wrote (36946)	1/10/2000 5:37:00 PM
From: Steve Robinett	Respond to of 41369

--David Today's high volume (90 million vs. a daily average of about 24 million) is evidence of heavy arbitrage activity, people selling AOL short and buying TWX to lock in the disparity between the market valuations and the value of the AOL/TWX deal. This will probably continue until the market price of both AOL and TWX reflect the merger. As long as the merger goes through, it's free money for the arbs. I would guess there is more downside ahead. Best --Steve