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

To: David who wrote (1896)	12/2/1997 1:02:00 PM
From: Robert A. Sutherland	Read Replies (2) \| Respond to of 3506

It appears more like a valuation/risk differential was applied. We know that Ashtech management is handed the controls. We know that Magellan had 9mos sales of $50mm(97) vs $56mm(96) and they were losing money (latest Orbital filing, Nov 14,97). We also know that Ashtech '96 revenue was $47.4m, and annualized growth was ~35% Q1 '97 (can't find that on their new web page, so going from memory). I think, based on these observations, that relative valuations would have been 50/50 which would place both entities sales at ~$67mm (Although Ashtech may have an edge here as they are growing revenue). The $75mm is a good one and would infer a 1.1x valuation to sales. Not very good. I think some of the venture types wanted their money back, with the chance to make alot more on the combined entity. Orbital sees it as a way to limit there intermediate term losses with Magellan. Ashtech is profitable and growing, where Magellan is not. However, Magellan has access to Orbcomm and the Rockwell car navigation product line, and knowledge of low cost manufacturing methodolgy, where Astech does not (Trimble doesn't have these, either). This is potentially where the largest growth areas will be. Also, Ashtech still has its arrangements with Matsushita and Philips. It looks like a good fit. Hopefully the combined company will be worth more than the two individual companies take separately.