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Technology Stocks : Creative Labs (CREAF) -- Ignore unavailable to you. Want to Upgrade?

To: Dennis G. who wrote (12701)	11/9/1998 5:32:00 AM
From: Savoirman	Read Replies (1) \| Respond to of 13925

1. I think Creative can very well issue new shares to acquire other tech companies. Like Silicon Engineering. In fact, the trend is not to use cash these days. These acquired companies will have to work harder to justify their existence (since the new shares' price will move in response to earnings). Otherwise you may get the case where the happy seller just quits and runs off with his cash windfall. So tons of cash reserves is not needed on Creative's part, but a strong and stable share price is, plus a high multiple. Creative has more than enough cash for the immediate term, and management sounds very confident about prospects for the year. Which means cash generation is not going to be a problem. 2. There are many institutions which cannot buy into a stock unless the company pays a dividend. So this will broaden the appeal of Creative to include pension funds and the like who are more interested in income. There are many of these in Singapore, for example, the Central Provident Fund (almost everybody here is a member) has a "Trustee" status where, among other things, a company must have paid a dividend for the last three years to qualify. And many institutions here cannot buy anything but a "Trustee" stock. Creative (one of the most successful companies in Singapore) is NOT a "Trustee" stock. Guess why ... 3. Singapore allows tax free dividends in certain cases like high-tech companies (like Creative) to encourage these industries. 4. Personally, since I live in Singapore and can enjoy the tax-free dividend status, I'm delighted with the dividend, and am more likely to hold on until at least the ex-date.