Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : MRV Communications (MRVC) opinions? -- Ignore unavailable to you. Want to Upgrade?

To: Bridge Player who wrote (22689)	8/2/2000 12:45:32 AM
From: opalapril	Read Replies (2) \| Respond to of 42804

BridgePlayer, you are mistaken when you say, "PALM spin-off did not occur until 7/27/2000." The COMS/PALM "spin-off" was done in early February 2000. That's when PALM was taken public and slightly less than 15% of PALM's newly registered shares were sold. At that time PALM officially became an independent entity and freely traded on the NASDAQ. (Most of the shares, by the way, appear to have been sold to COMS/PALM partners, including the likes of MOT and ERICY.) The *final distribution* to shareholders of the remaining shares (almost 85%) occurred almost five months later, at the end of July. This was somewhat ahead of the 3rd calendar quarter of 2000, when COMS initially predicted it would happen. You are not being 'pedantic,' by the way, merely tiresome. Nevertheless, I accept your apology. Focus on the central issue here. In its essential features MRVC intends to spin-off a subsidiary in the same way as the COMS/PALM or HWP/A spin-offs; first a small minority of shares are sold in a "public" IPO, later the remaining shares are distributed to shareholders. For this to be a non-taxable event, MRVC must assure the IRS that it is a bona fide reorganization. For a period of two years after the spin-off, due to current prevailing pooling of interest rules, any potential acquirer of MRVC would be subject to paying the taxes previously foregone and possibly penalties -- a daunting barrier to any post spin-off deal. From a historical perspective, which was where this conversation began, COMS was able to spin-off PALM only because it waited until more than two years had passed after acquiring PALM in the USRX purchase. Q.E.D.