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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: PCSS who wrote (95804)	3/7/2002 4:42:56 PM
From: Captain Jack	Read Replies (1) \| Respond to of 97611

Michael-- not a <<"on a PERSONAL campaign ... and especially Carly">> but a cry baby vendetta! Sadly, he can lose inherited millions and not feel a thing. With luck--- someone will sue him for neg on the holding if it loses. He would look good behind the counter at McDs if he could qualify using the cash register,,

To: PCSS who wrote (95804)	3/7/2002 5:11:25 PM
From: Elwood P. Dowd	Respond to of 97611

Odds rise on H-P/Compaq combo by: iamlongcpq (47/M/boston, MA) 03/07/02 05:06 pm Msg: 276024 of 276024 PALO ALTO, Calif. (CBS.MW) -- The odds of H-P completing its merger with Compaq have improved following key decisions from the FTC and an influential analysis group this week, as reflected in the stock movement of the companies. Sliding shares of H-P and rising shares of Compaq are narrowing the gap between what H-P plans to pay for the Houston-based computer maker in an all-stock deal, and what the market thinks the company is worth. But the gap, or spread, between the offering price and market price remains at about 12 percent -- wider than many deals that go through, according to money managers familiar with the practice of arbitrage, which essentially involves betting on merger spreads. "The tighter the spread, the greater the certitude that the merger will take place," said Elliot Blumberg, hedge fund manager with Vigilant Investors in Los Angeles. "But with H-P/Compaq, it's not a tight spread. There's a reason why it's still at 12 percent." The spread on H-P/Compaq has improved since midday Tuesday, before the proxy analysis firm Institutional Shareholder Services recommended that its clients vote for the proposed combination. Before the ISS decision, Compaq's shares traded at about a 25 percent discount to the value H-P would pay in its proposed stock swap. In a matter of days, the gap has been cut by roughly half. But it's still wider than the single-digit gaps on deals that Blumberg says are likely to be approved. "The spread is unusually wide and continues to remain so although it has narrowed somewhat from a few days ago," added Pravin Banker, principal with The Financial Network in Greenwich, Conn. Any stock arbitrageurs who are buying the stock today are betting that the deal will happen, and that a 12 percent return is likely if they buy Compaq shares, and short-sell H-P shares at the same time. Should the merger go through, H-P and Compaq anticipate operating as a joint company in early April. So, when annualized, the anticipated 12 percent arbitrage return in a month is a 144 percent gain -- or nearly a 250 percent gain when compounded. According to Banker, typical spreads should have a 20 to 25 percent annualized return. The return on an H-P-Compaq arbitrage bet gives an indication of its risk. "For this reason, arbs continue to be cautious," Banker said. But Bear Stearns is one of the arbitrage traders that says it's bullish on an H-P-Compaq arbitrage bet. The brokerage issued a report Thursday indicating it's shorting H-P and buying H-P put calls, while buying what it says are a medium-sized positions in Compaq. According to its arbitrage analysts, it's a 70 percent probability that the H-P-Compaq merger will be approved. Analysts at Bear Stearns added that the H-P-Compaq spread is likely to stay wide until March or April, when vote tallies start rolling in. In the meantime, large H-P shareholders could affect the spread if one or more come out for or against the deal. Shares of H-P (HWP) fell 18 cents to close at $20 on the Big Board, while Compaq (CPQ) shares rose 17 cents to $11.15.