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

To: Susan Mueller who wrote (48594)	2/9/2000 11:17:00 PM
From: spyhunter	Read Replies (1) \| Respond to of 50808

I believe I read that it would close in March Chris

To: Susan Mueller who wrote (48594)	2/10/2000 7:27:00 AM
From: Lane Weatherly	Respond to of 50808

C-Cube Forges Spinoff With a Twist by Olaf de Senerpont Domis Faced with a complex situation, C-Cube Microsystems has taken refuge in a complex, tax-driven solution: to spin off its chip division, rename it and then sell off its remaining business. In other words, to spin itself off into its own chip unit. The Milpitas, Calif.-based company had been weighing the option of selling or spinning off its semiconductor business as part of a complex deal it struck in October to sell its Divicom unit, which supplies cable signal receivers and processors to cable companies, to Harmonic Inc., a Sunnyvale, Calif. maker of fiber-optic equipment that helps cable companies to upgrade their systems. Under the terms of the October agreement, worth roughly $1.5 billion, Harmonic said it would buy C-Cube's Divicom unit, but only if C-Cube first split off the chip unit-the other half of C-Cube-either through a spinoff or sale. Things will get even more complicated after C-Cube shareholders vote on the spinoff. Assuming they approve it, they will be issued stock in the newly independent C-Cube semiconductor unit. Then, after the sale of the remaining Divicom unit to Harmonic is closed, C-Cube's semiconductor unit will revert to its former name: C-Cube Microsystems. "We get a new tax ID, a new company but with the same name," spokesman Alan Markow said. "There would have been an onerous taxable increase if we didn't do it this way." The SEC is in the process of reviewing proxy materials for the C-Cube shareholder vote, which has not yet been scheduled, Markow said. Steven Horwitz, C-Cube's manager of investor relations, said on Wednesday that the company has several reasons not to pursue an outright sale of the unit. "We have a very strong management team, and the outlook is very good for us as a stand-alone company," Horwitz said. "We feel this company is primed for growth." At the time of the October announcement, some observers expected the semiconductor unit to attract serious interest from the likes of Intel Corp., Texas Instruments Inc., and STMicroelectronics NV. Apparently, the interest was not serious enough. "If you think you're sitting on a pot of gold, you are not going to give it up unless you get a high price," said Dan Scovel, a semiconductor analyst with Fahnestock & Co. in New York. "They apparently set a pretty high price." C-Cube's Horwitz declined to give any details on the company's discussions with potential buyers, but said "It was more legalese than anything else that made us say 'spinoff or sell.' Our intention from day one was to spin off." "The nature of the Valley is that you are always having discussions," Horwitz explained. "At a certain point, we would have a fiduciary responsibility to shareholders, but the outlook is very good for a standalone." Scovel believes C-Cube's stock would not have changed in value either way. "From a valuation perspective, it didn't really matter what their decision was," he said. "We've been bullish on the prospects of the chip business overall." Investors also appear to be satisfied with the route C-Cube is taking. After hitting a 52-week high of $86 on Tuesday, C-Cube's stock closed up another 3.4% on Wednesday, finishing at $88.56. In a Jan. 24 Securities and Exchange Commission filing, C-Cube said its board had several reasons for recommending a spinoff over a sale of the semiconductor unit, including the fact that the company was running up against a deadline with the Harmonics deal, which is slated to close by the end of March. -------------------------------------------------------------------------------