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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: LK2 who wrote (5754)	3/2/1999 10:26:00 AM
From: Robert Douglas	Read Replies (2) \| Respond to of 9256

Count me out. Out of all this talk that you can increase wealth by simply splitting a company into two or more tracking stocks. I know, I know QNTM was up sharply yesterday on the news, but is this really long lasting wealth creation or simply hocus-pocus? I'm not a believer in the efficiency of markets, but to say that the market is so stupid that it can't value two businesses and add them up is going too far, IMO. I could easily argue that the extra cost of bookkeeping, auditing and all the expenses of maintaining separate bank relationships will actually destroy wealth rather than create it. And what about that old financial theory of risk? Wasn't diversification supposed to decrease risk and therefore increase present value? I remember another time when it was vogue to take a company and change its capital structure by adding huge amounts of debt. Generally the stocks of those companies jumped on the announcement of that financial hocus-pocus too. Most of those turned out very badly. I may be old fashioned, but I still believe that you increase value by earning profits, not the way you present those profits to the public. -Robert