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

To: Richard Haugland who wrote (12828)	11/19/1998 4:56:00 AM
From: Gopher Broke	Read Replies (1) \| Respond to of 13925

The real question is what is Creaf's objective in buying back. If they are looking at the buyback simply as an investment then they should be trying to buy without pushing the price up. Buying from Ng would be a part of this strategy, as would buying at below the offer price as some posts suggest happened yesterday. They would not want to see a rapid rise or (horror of horrors) some upward momentum creeping into the stock. Personally I do not think this is the reason Creaf are pursuing the buyback. The primary objective (as I believe was stated in the extraordinary meeting to approve it) was to allow Creaf the same level of defense against speculation/manipulation as is available to US registered companies. Sim has said several times that he is upset with the current share value, so I believe Creaf has a secondary, shorter term objective to bring Creaf's shares back to a more realistic valuation relative to earnings. (It would sure make me feel more comfortable if they did:) If that is the case then the real problem is with valuation not capitalization - they may be able to achieve the secondary objective without buying all the allotted 10%. The scenario we might see is that Creaf try and hike the price while buying as few shares as possible, keeping the 10% in reserve for defence. This would result in - an initial kick in the price as Creaf buys to start the ball rolling - a ramp up as Creaf lets the fence-sitting investors jump in to continue the boost - some heavy buying from Creaf as soon as there are signs of profit taking at the first hurdle - stabilization into a steady upward trend. The danger, from Creaf's perspective is that the 10% they are allowed to buy may not be enough to prevent a stall at a heavy resistance point. They just need to tread carefully. Worst scenario is to buy all 10% at $18 and then have the price fall back. Exciting times though!