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

To: Jim McMannis who wrote (77455)	2/3/2000 6:52:00 PM
From: Captain Jack	Respond to of 97611

Jim ~~~~~~LOL~~~~~~~ cpq has been unable to get cpq going in the right direction,, if that is tough to handle how well would they do for either co with more to occupy their minds??

To: Jim McMannis who wrote (77455)	2/3/2000 8:45:00 PM
From: Andreas	Read Replies (1) \| Respond to of 97611

To Jim McMannis; In response to your question. Alta vista is owned primarily by CMGI. What does that mean, you ask? When cpq sold alta vista, it didn't sell all of alta vista. cpq retained about 17% of alta vista (an asset on the balance sheet of cpq) and gave cmgi 83% of alta vista. In other words, in exchange for selling 87% of alta vista to cmgi, cpq received common stock in cmgi equal to about 17% of the total outstanding common stock of cmgi. On the books of cpq there was a credit equal to 83% of the cost of alta vista carried on cpq's books. This credit was offset with a debit in equal dollar amount consisting of (i) "investment in cmgi". This investment in cmgi is equal to 17% of the total cmgi outstanding common stock but may in fact have a "cash value" on liquidation in excess of the "book value" of the 83% of alta vista formerly carried on the books of cpq. If and when cpq sells their cmgi stock, a gain or loss will be realized. Therefore, in conclusion, on the detailed and itemized balance sheet of cpq, immediatley after the sale to cmgi, you will see the following two items in the asset section of cpq's balance sheet - (i) cmgi common stock totalling about 17% of the total outstanding common stock of cmgi and (ii) 17% of the original cost basis of the assets of alta vista. Since cmgi owns 83% of the alta vista assets, it is cmgi that can effectively "spin it off". Sure, cpq could "spin off" its 17% of alta vista - but who would be interested in that deal? The underwriters? No! That deal is too small!! Obviously, the meaningful spin-off is with cmgi. The more relevant question is "why doesn't cpq throw their 17% in with cmgi's 83% and spin-off the whole total?" I hope this explains this deal. The actual deal is somewhat more complicated than this - but going any deeper doesn't really add anything to the overall effect.