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Technology Stocks : LOCKHEED MARTIN, (LMT) -- Ignore unavailable to you. Want to Upgrade?

To: Wowzer who wrote (426)	9/22/1998 8:26:00 AM
From: Wally Mastroly	Read Replies (1) \| Respond to of 732

Yes, I think the COMSAT purchase would be a good fit - in the long run. There may not be a short, simple answer to your question, however. Obviously investors don't like it in the very short term. Probably a couple of reasons are involved, IMHO of course. First, the business is considered as one of risk. Second, LMT is acquiring a lot a debt - on top of existing debt. The credit agencies are already looking at that subject. That debt will probably dilute LMT earnings for X number of quarters. Third, investors, may think that the 33% stock price premium - to buy CQ - is too high. Also, and probably worst of all, the deal has to go through a couple of hoops to be completely approved. Following excerpts try to outline some of what's involved: "The first phase will require approval by Comsat shareholders, the Federal Communications Commission and U.S. antitrust agencies. In the second phase, Lockheed will exchange one of its shares for each two Comsat shares. The stock swap is valued at $1.4 billion. The second phase, however, will involve enactment of pending federal legislation. Comsat was established by Congress in 1962 as the country's representative for the international Intelsat system, which provided satellite communications around the world... " The first phase involves purchase of 49% of CS & the second phase involves buying the rest. The initial market reaction seems to indicate doubt on the probability of success. And if they are not careful, another long drawn out "merger" attempt could reflect badly on management and consequently the stock price. Can LMT get through all those hoops? Hard to say. In my opinion, however, it could be worth it in the long run. However, will investors be willing to make a long term play, after the stagnant stock price movement resulting from the aborted NOC merger attempt? Who knows. But investors do not appear to be in a very patient mood of late.