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Microcap & Penny Stocks : DCI Telecommunications - DCTC Today -- Ignore unavailable to you. Want to Upgrade?

To: valuehunter who wrote (13048)	12/28/1998 2:18:00 PM
From: Rob Taylor	Respond to of 19331

V, You said, "I would think that the move off the BB itself would result in a price double to around $6.00. Depending how any negotiations are then going for a buyout, the premium would be alot less on a $6 stock vs a $3 stock." While I won't guess at the increase, I believe there would be upward movement of DCI's price once it is listed. However, there is no "automatic" in the investment business. Listing on a major exchange simply gives "institutional" investors access to the stock if they had listing or value restrictions previously. Additionally, there are those individual investors who will not risk their money on BB stocks. Those reasons USUALLY result in upward price and volume movements. With regard to a buyout, the word premium can be applied to several things. When a suitor negotiates for the purchase/buyout/takeover of a company, it depends on what is being offered. It can be stock (including warrants, options etc.), in the acquiring company, cash for the outstanding shares of the company being acquired, a combination of cash and stock, and sometimes other arrangements. All of these options are based (usually) on the book value of the company as of the day of the offer, plus some perceived value (to the acquiring company) dictated by the new company's growth and position in their market, industry growth and perceived future opportunity in that overall market, synergistically, how the fit will benefit the "new combined company" the overall stock market health and momentum, and of course, how quickly the investment will "payoff" better known ROI. All that said, I am assuming you use the word "premium" to mean the difference between the market trading price the day BEFORE the announcement and the stated acquisition price once the announcement is made. If so, in a perfect world, ie. no leaks or price movements based on expectations or rumors, the premium paid for the company would be that difference. I would ask that you not get too hung up on %'s or dollar amounts. DCI stock has been as low as $.67 and as high as $4.31 in the past 3 months. If you purchased at the low and sold at $10/share your personal premium would be the difference or less commissions, or about 1490%. Not bad. As a final note. Premiums should be based on the value the acquired company will bring to the parents bottom line, not so much what the market perceives the value to be today. Best, Rob