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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: ANANT who wrote (40442)	12/5/2000 2:43:20 PM
From: Jim Lamb	Read Replies (1) \| Respond to of 41369

ANANT, all. Case sure seems confident on this deal being approved and even saying that investors will be rewarded shortly thereafter. "but he said investors will likely be comforted by what they see in the first months following the completion of the deal". Keep up the great post's.

To: ANANT who wrote (40442)	12/6/2000 6:59:05 AM
From: ANANT	Read Replies (1) \| Respond to of 41369

AOL-Time Warner Merger Looks a Bit Different Now By MARTIN PEERS Staff Reporter of THE WALL STREET JOURNAL interactive.wsj.com excerpts: The exchange ratio gave AOL holders 55% of the combined company, which has triggered criticism among some media investors. "I thought they did a bad deal the day they announced it," says Sal Muoio, principal of New York investment firm SM Investors. "It's just stupid," he adds. "They gave away truly irreplaceable franchises at the peak of a cycle of valuations for AOL-type companies." Some analysts ask whether Time Warner should try to renegotiate the deal's terms. "I have had a number of people mention to me, 'shouldn't Time Warner break the deal and then do a hostile takeover offer for AOL?' " says Ed Hatch, an analyst with SG Cowen Securities. Richard Parsons, Time Warner's president, said the company's senior management was "more convinced today than ever that this deal makes eminent good sense for the shareholders of Time Warner." AOL declined to comment. -------------- The companies originally expected to complete the deal by the end of the fall. But an extended regulatory review could delay closing until early in 2001. The Federal Trade Commission could vote on the deal as early as next week. If the FTC approves it, the deal still has to be approved by the Federal Communications Commission. Many analysts and investors believe AOL shares without the deal would have fallen much further -- Yahoo!, for instance, is down 81% -- while Time Warner shares would likely be still trading roughly where they are now (close to before the deal was announced). As a result, renegotiation of the deal in today's climate would yield a very different result, investors agree. ----------- Today, Time Warner shareholders would likely emerge with roughly 65% of the combined company, says one money manager, who declined to be identified, as opposed to the 45% they are to get in the deal as proposed. "The controlling shareowners should be Time Warner shareowners, not the other way around," says Mr. Muoio, who doesn't own Time Warner shares. He argues that Mr. Levin "panicked" by agreeing to the deal when he did. "They really blew it. They should have waited." Another money manager reckons that Time Warner agreed to the deal because it was nervous AOL would make a hostile bid -- which wouldn't have guaranteed jobs for top Time Warner executives the way the proposed deal does. Nonsense, some Time Warner supporters say. "Nobody could have foreseen the huge meltdown in the technology market, and the deal they struck showed foresight that has been rewarded on a relative basis by the market," Janus's Mr. Schreiber says. He notes that from Jan. 7, the last trading day before the merger was announced, to Dec. 4, Time Warner stock was down 5% -- equal to or less than the decline in other entertainment and cable stocks such as Viacom, Comcast and Walt Disney. AOL is down 44% during the same period, well below the swoon of many other Internet companies. ------------ Another big Time Warner shareholder also dismisses the criticisms and says the 50% premium offered by AOL implied that AOL's stock was overvalued. "What if they waited six months and tried to strike a deal? It's possible that it would have been down to 50/50 instead of 55/45. But you are talking about 5%, which is $3 a share," the shareholder says. "It's really not going to make any difference 10 years from now." --------- John Tinker, managing partner of investment firm Steamer Capital, says Mr. Levin was criticized for buying cable systems in the mid-1990s when cable was out of favor. The subsequent rebound of cable vindicated Mr. Levin's thinking, Mr. Tinker says, and a similar change of view could occur with the deal if the Internet sector comes back into favor. "Another six months we could be in a huge bull market again, and suddenly Time Warner looks really good," Mr. Tinker says, adding that the critical issue is that AOL's fundamental business is still performing strongly. Even investors who don't like the terms agree that Time Warner's rationale still holds water. "Strategically it makes sense in every way," Mr. Muoio says. Mr. Hatch of SG Cowen adds: "The only thing that has changed has been external, unpredictable market forces, certainly not the vision and the strategic sense of the deal." -------------