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.