MMWW and their situation. They are a mirror of
CBR in approximately 4 months. It is like getting a
glimpse of the future. Their buyout had NOTHING to do
with the S&P PE or the average valuation of anything.
It had everthing to do with a company that wanted
what they had, didn't want to spend lots of time to
try to get there. PSIX determined that they could buy
what they needed at a price that made MMWW
shareholders overjoyed...At approximately a 300% premium to
the market share price. Take it from me, I was a
shareholder, it was great.
I would not be surprised if
CBR has already been approached by a number of
companies looking for IT and NET consultants to attach to
their existing assets. I know of an Indian company that
is looking in the US to do just that. I would guess
that PSIX tried CBR too. Any logical management would
have tried to make the best deal and would have
approached all the leading players in the field, which would
include CBR.
I get the impression from the IPO
announcement that CBR Management thinks that they have
discovered the solution to their boring stock price with the
IPO/carveout and subsequent spinoff. They may realize the
temporary nature of the stock price goose-up that this will
cause because they have already positioned themselves
to IPO the new joint venture with Verio (whatever
its name is <ggg>). But sooner or later they
will run out of divisions or subs to sell. Then what?
At the very least, I can hope that the share price
has been moved up and they can sell out at a higher
price. Regretably, once you've sold most of your assets,
your stock price isn't necessarily going to be as high
as when people were buying to get a piec of the
spinoff (check COMS chart and MMWW to see how they both
crashed, just BEFORE each of their IPOs).
All of
these laudable moves will occur in the unpredictable
future. The unpredictability is the only good reason to
take $40 now rather than hope for a possible $50 or
even a $70 share value in the future. All you have to
do is ajust for the time-value-of money and then
adjust for the probability that this stock price rise
will not happen and even $35 next month looks
wonderful.
But then, you probably already agree with me. I am
sure others do not. I would much rather read contrary
arguements than the usual spam on this board.