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Technology Stocks : Creative Computers(MALL) -- Ignore unavailable to you. Want to Upgrade?

To: Tom Hua who wrote (1218)	12/10/1998 10:26:00 PM
From: Tom Hua	Read Replies (1) \| Respond to of 1634

The following WSJ article is 3 days old, but it's very telling of what's going on with MALL. December 7, 1998 Creative Computer Dn; Arbitrage-Related Shorting Cited By JOELLE TESSLER Dow Jones Newswires NEW YORK -- Shares of Creative Computers Inc. (MALL) have fallen about 40% over the past two trading days as investors apparently short the stock trying to capitalize on an arbitrage opportunity created by the company's spin-off of online auction operator uBid Inc. (UBID) late last week. However, at least one analyst called their strategy misguided. Creative Computers last Friday spun off about 20% of uBid in an initial public offering of 1.58 million shares. Like a number of other recent Internet IPOs, uBid's shares - which were priced at $15 each - quickly shot up several hundred percent in the aftermarket. The stock climbed to as high as 60 1/2 and closed at 48 Friday. But uBid's steep ascent has left Creative Computers' remaining 80% stake in uBid - which Creative Computers plans to issue to its shareholders in another six months - worth more than Creative Computers' current market valuation. With Creative Computers' shares trading at about 23 Monday, the company - which had about 10.35 million diluted shares outstanding as of its latest earnings report - has a market capitalization of about $238 million. And with uBid's shares trading at about 43 Monday, Creative Computer's remaining 80% stake in uBid is valued at about $270 million. One source explained that it would make sense for investors to short uBid in this situation since the stock will likely fall to better align the two companies' values. But, he explained, because investors cannot short uBid's shares until 30 days after the IPO, some are instead shorting Creative Computers thinking they can short uBid this way. Noting that Creative Computers' current valuation does not assign any value to the company's core computer direct marketing business, he added that this strategy does not make sense because - assuming that Creative Computers' core business does have some value - the company's market cap already assumes uBid will trade lower in the aftermarket. One source speculated that Creative Computers shares are also down following the uBid pricing after running up ahead of the spin-off on expectations that the IPO would perform much like other recent Internet offerings. He added that after seeing EarthWeb Inc. (EWBX) climb more than 600% and TheGlobe.com Inc. (TGLO) climb almost 1100% in the days following their pricings, investors may be disappointed that uBid rose only 400%. In active Nasdaq trading, Creative Computers' shares were recently down 3 1/4, or 12.4%, at 23. And uBid's shares were down 4 1/4, or 8.9%, at 43 3/4. Company officials were not immediately availbable for comment.