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Technology Stocks : Network Associates (NET) -- Ignore unavailable to you. Want to Upgrade?

To: Charlie Smith who wrote (4166)	2/4/1999 2:58:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 6021

Charlie, I think we are of like mind on this issue. It is needlessly complex as a result of a mishmash of purchase and pooling of interest mergers made possible by arcane accounting rules. I think the result of my analysis clearly indicates that while the company is clearly growing as a result of all of the acquisitions, investors may not be better off because as you know, many of the mergers are accomplished through the exchange of stock which inevitably results in a diluted interest in the combined company. I think one of the things that is needed is a chart of operating cash flow that treats acquisitions as if they were purchases. Under that scheme we would view the purchase price as the value of the new shares issued to consummate the deal. The only costs that would be recognized would be out of pocket (cash) costs, and then we would clearly see the dilution of shareholder interest because the number of shares would exhibit a sudden increase. As it is, under pooling of interests, you really need to dig to figure out how many new shares were added as a result of the merger. TTFN, CTC

To: Charlie Smith who wrote (4166)	2/4/1999 4:25:00 PM
From: Guerrilla	Respond to of 6021

Right you are, Charlie. Also important, though, is how much NETA pays for earnings (or potential earnings), and then what NETA does with the companies once it buys them. Conseco, an insurance company, is known as a very efficient consolidator--sometimes sending the moving trucks to the acquired company's offices the day of the announcement. I would hope that Networks Associates' acquisitions would yield some REVENUE synergies, too (i.e., cross-selling, bundling, etc.), not just cost savings. Any sense from anyone on how well NETA does on that front? By the way, it was quite a ride on the Network Associates roller coaster today. Despite rumors of nervousness surrounding Intel and other technology companies--plus the shellacking of the health care information services sector--NETA held up pretty well, rising to $48 by noon, before it settle down slightly before yesterday's close. It definitely seems more oversold than overbought. Any thoughts?