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Technology Stocks : IATV-ACTV Digital Convergence Software-HyperTV -- Ignore unavailable to you. Want to Upgrade?

To: art slott who wrote (10098)	4/15/2000 9:47:00 PM
From: Bruce Cullen	Read Replies (1) \| Respond to of 13157

FYI - Valuations=buyouts? Buyout or pay to develop? = = = = = = = = = = = = cbs.marketwatch.com Market plunge makes M&As attractive Small Internet companies most vulnerable to takeovers By Jon Friedman, CBS MarketWatch Last Update: 9:08 PM ET Apr 15, 2000 NewsWatch NEW YORK (CBS.MW) -- The sharp decline in stock prices could trigger increased merger and acquisition activity among some of the small, vulnerable Internet companies, said Michael Holland, president of Holland & Co. and a regular panelist on "Wall Street Week." Today on CBS MarketWatch Aftershocks await U.S. stock market Market plunge won't fend off Fed rate hike in May Days of go-go IPO market may be over T-Online shares debut in Germany Monday Diving stock prices may trigger M&As More top stories... CBS MarketWatch Columns Updated: 04/15/2000 7:27:40 PM ET In many cases during the recent plunge, the companies that have taken the biggest hits were unprofitable Internet companies. Their shares had climbed to unprecedented levels amid Wall Street's optimism about their potential to make money in the future. "The stock drop could accelerate the rate of mergers and acquisitions among the '.com' companies," Holland said following the close of trading Friday. "These companies' stocks have fallen so far and become so cheap that they're attractive to companies that can still afford to expand their operations by buying growth, rather than building it." Holland also said that if stock prices continued to stay low in the near term, the M&A buying binge "could spread beyond ".com" companies to larger companies." Friday, the Dow Jones Industrial Average ($INDU: news, msgs) posted its largest one-day drop in history as stocks fell 617.78 points, or 5.66 percent, to 10,305.77. The Nasdaq ($COMPQ: news, msgs) plunged 355.49, or 9.67 percent, to 3,321.29. The Nasdaq has dropped 18.38 percent so far this year and the Dow has fallen 10.36 percent. Media blockbusters Leading up to the stock market plunge, the deal flow looked robust, particularly in the media sector. In early September, Viacom (VIA: news, msgs) announced its plans to acquire CBS (CBS: news, msgs) in a ballyhooed agreement. CBS is a significant investor in CBS.MarketWatch.com, the publisher of this report. Wall Street was salivating with the prospect of Viacom, whose properties included MTV and VH-1 as well as Paramount and Nickelodeon, and CBS, one of the biggest television networks and a powerhouse in radio as well, joining forces. The revenue from advertising dazzled securities analysts. While the media industry and Wall Street were still pondering the CBS-Viacom announcement, an even bigger deal was announced only four months later. On Jan. 10, America Online (AOL: news, msgs) said it would acquire Time Warner (TWX: news, msgs) for an amount estimated to be $160 billion. The staggering agreement called for an alliance between the biggest Internet provider and the largest media company. At a lunch with reporters April 12 -- two days before before the stock-market destruction on Friday -- Time Warner Chairman Gerald Levin told reporters that the companies were moving smoothly toward a plan to close the transaction this fall. History as a barometer If history is any barometer, consider that when the Dow Jones Industrial Average fell 508 points on "Black Monday," Oct. 19, 1987, investors around the world were in a state of shock. In 1987, like today, corporate earnings looked strong and the "Crash," as it became known, didn't immediately trigger a recession in the United States. The economic downturn didn't surface until 1990. One year after the Crash, in November 1988, the then-biggest corporate deal ever took place: the leveraged buyout of RJR Nabisco, the huge tobacco and food company, by Kohlberg Kravis Roberts for about $26 billion. "What's happening now in the stock market and the economy reminds me of what we saw in 1987," Holland said.