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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year -- Ignore unavailable to you. Want to Upgrade?

To: Marq Spencer who wrote (3600)	11/18/1998 11:07:00 AM
From: hoyasaxa	Read Replies (1) \| Respond to of 4509

Great analysis Brian. Thank you. (eom)

To: Marq Spencer who wrote (3600)	11/18/1998 11:44:00 AM
From: Chuzzlewit	Read Replies (2) \| Respond to of 4509

Brian, you are right to be wary of this deal. There will be a one time charge because Momentum shares will be distributed to PSFT shareholders, but this is not an expense in the usual sense. Rather, it is a distribution (taxable as a dividend no less!). Remember also, that securities are not marked to market. This means that the equity position that PSFT maintains with Momentum will remain on the books at its initial value (not market value). Other than on that point, I agree with the bulk of what you are saying. There are really only two issues that ought to be dealt with: (1) Will the cash flow of PeopleSoft change as a result of this deal; and (2) Will Momentum be able to generate business incremental to what is generated from contractual arrangements. The point behind my post was that there could have been constraints placed upon the R&D people preventing them from pursuing promising new software solutions in favor of adhering to corporate guidelines. If so, there could be some "unlocking" of value. I'm not stating this as fact -- it is just conjecture at this point. I believe that the key will be the second issue, but we won't know that until we see some direction from Momentum. I don't mean to sound too pollyanish, but hope springs eternal. TTFN, CTC