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Non-Tech : CompUSA (CPU) -- Ignore unavailable to you. Want to Upgrade?

To: blankmind who wrote (1262)	2/18/1999 2:51:00 AM
From: Bill Wexler	Read Replies (1) \| Respond to of 3187

CPU now valued significantly less than Computer City. CPU paid approximately .35 x sales for the Computer City chain. The remaining Computer City stores have now been turned to profitability and the entire CompUSA chain is profitable. The entire CompUSA chain now trades at roughly .15 x expected FY 99 sales. Several posters on the Yahoo board have speculated that the stock will sink to 7 a share. While possible, this raises an interesting hypothetical situation. At 7 a share the company will have a market cap of roughly $630 million. This means that Tandy should consider buying the entire CompUSA chain. After they cancel the promissory note for the CC acquisition (since Tandy is the original maker) and extract the cash (remaining liabilities and payables are easily manageable from existing cash flow) that means they get the entire chain including the (now profitable) Computer City stores for about $200 million more (net) than what CompUSA paid for Computer City alone. To put it another way, Tandy will end up coughing up about the same amount of money out-of-pocket for the entire CompUSA chain (+ the Computer City chain comes back for free) than what CompUSA paid for Computer City alone. Not a bad deal! CPU is grossly undervalued and will eventually trade significantly higher.