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Strategies & Market Trends : Piffer OT - And Other Assorted Nuts -- Ignore unavailable to you. Want to Upgrade?

To: Jorj X Mckie who wrote (26490)	4/6/2000 3:51:00 PM
From: Alan Smithee	Read Replies (1) \| Respond to of 63513

Courtesy of our friends at briefing.com: 13:58 ET ****** Peregrine Systems Inc. (PRGN) 38 -20: Is it possible to negotiate too good a deal? B2B e-commerce concern, Harbinger Corp. (HRBC 27 3/16 +3 1/16), may have done just that when it convinced Peregrine Systems to pay approximately $43.50 a share for the company, a staggering 80% premium to yesterday's closing price. Investors not responding favorably to news of the $2.1 billion acquisition, as PRGN shares have been taken down 35%, while being slapped with several downgrades. Based on Peregrine's current price, the 0.75-to-1 exchange ratio values Harbinger at just $28.50 per share. It is certainly a possibility that a lesser premium may have sparked a rally in Peregrine shares, which would have in effect translated to a higher bid for Harbinger. As it stands now, investors are left dumbfounded by the deal, asking themselves why Peregrine would pay through the nose for a company that is fresh off an earnings warning and in the most recent quarter managed to grow revenues by just 16% -- less than one-quarter Peregrine's rate of top-line expansion. The market is concerned, rightly so, that the process of integrating Harbinger could potentially cause hiccups on PRGN's bottom-line for several quarters. Given that PRGN trades at such a rich multiple (more than 180 times projected 2000 earnings), investors understand that the stock could be cut in half on an earnings warning. This sudden change in the company's risk profile is causing investors to sell now and ask questions later. Downgrades by Prudential and DLJ making the decision to exit the stock that much easier. Now the process of re-evaluation begins. Management will be grilled by investors about the possible risks associated with the integration of Harbinger and on whether the issues which caused Harbinger to warn about Q4 results have been solved. However, the overall tone of equities will be most influential in determining the near-term direction in PRGN shares. Should the tech market regain its swagger, investors will look to use today's sell-off as a buying opportunity, wagering that they'll be able to ride the stock for at least one more quarter before any problems associated with the acquisition present themselves in the form of an earnings warning. - DS