To: AlienTech who wrote (4763 ) 4/7/1999 12:47:00 AM From: Chuzzlewit Read Replies (4) | Respond to
Alien, the problems span back some time. The real issue is that Larson and company hoped that a little financial cosmetics would hide the warts. A touch of rouge here, a dab of lipstick there, and now we have a company as lovely as a picture. Do some acquisitions and write off a bunch of costs and hope nobody would notice. But the problem was that the deals didn't make much financial sense going in because they were too damned expensive. That's not to say they didn't make strategic sense. But Larson does 'em, and the analysts following the deal understand what Larson is doing but seem to wink at him when he talks about illusory accretion of earnings. You will pardon my French, but it is all Bullsh*t. Larson lied, and the analysts and big funds let him get away with it by voting with management. Here is Chuzzlewits general rule regarding mergers: Excluding the elimination of redundant functions (e.g. , G&A), a merger can never be accretive to earnings on a per share basis if growth rates are to be maintained. Any CEO who tells you that is lying through his teeth. The reason is simple: you can only merge with another company if you pay more than market for the company. The NETG merger still sticks in my throat.
