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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Ditchdigger who wrote (48899)	2/19/1999 4:43:00 AM
From: rupert1	Read Replies (2) \| Respond to of 97611

Ditchdigger: It is irrational. I am trying to block out all the posts on AV shares. It's driving me crazy! By spending a limited amount on AV before the spin-off, CPQ creates critical mass. It will leverage this by spinning off part of the company creating an immediate increase in the value of CPQ's AV assets on the balance sheet. This will be the first way it will "unlock financial value for the shareholders". It will retain a majority of the shares in the new AV and through time, this holding will increase in capital value. That is the second way it will benefit CPQ shareholders. Involvement with AV will provide many creative ways of developing, promoting and selling CPQ products. This will be third way it will benefit shareholders. Another possible way it might benefit shareholders would be if it were to dispose of part of the IPO to CPQ shareholders of record on a given date. This is the least important way of benefitting shareholders, and the least important reason for anybody to buy or hold CPQ stock. Given that the main reason for the spin-off is to raise up to $2 billion for the development of AV, I cannot see much point in giving away any "free" shares. It would be a pointless gesture which would cheapen the scheme. The actual number of shares given away to shareholders would have to be very small and their nominal value relatively insignificant. I could more easily accept that they would offer the IPO shares to CPQ shareholders of record on a given date at the initial price. I would think that the major shareholders - the institutions - would be more than willing to buy up the entire offering. So I would assume that they will allow all shareholders the right to tender for shares and then distribute them proportionately. Presumably, many of those buying AV at the IPO price would sell in the open market for a quick profit. However, I would think that institutons might hold on to them rather longer than they have held onto other Interent IPOs simply because of the history of capital appreciation some of the early one's have developed and because this IPO is backed by CPQ.