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Technology Stocks : Internet Analysis - Discussion -- Ignore unavailable to you. Want to Upgrade?

To: kjhwang who wrote (409)	3/5/2000 11:53:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 419

TCI, The problem is that the acquisition resulted in an immediate change in the characteristics of AOL (which will cause a shift in the beta) which is not measurable using data from 1999. If nothing else, the precipitous decline in the combined capitalized value of the companies tells you that the average cost of equity capital for the combined entity must have increased. I don't feel comfortable in estimating a beta with less than around three years of monthly data -- the error is just too great. It makes sense, however, to discount the expected TWX contribution against the pre-merger WACC, although even here there are similar problems because of the Netscape acquisition. TTFN, CTC