Such utter foolishness!
Again, you guys are not understanding the extreme damage of low share prices.
It would be laughable to try to save a buck when the unintended consequence is bankruptcy.
Think about the small saving compared to the $billions in market cap damage that may never come back.
Your market cap determines your credit worthiness if you didn't know, hello?
It is a critical part of your credit profile.
You will pay more to borrow money which adds up to more than the entire VM acquisition.
Understand this properly.
The reason the stock is this low is because it was even lower last year.
Such precedents are extremely damaging.
And the longer the company share spends at these levels the more permanent the effect.
If you don't believe me find somebody knowledgeable.
When a big cap's share drops this low, most do not come back.
I don't have a problem with the stock dropping and recovering.
But extended, prolonged, monotonous low share price has real material effect on the credit quality and therefore operation of the company.
sprint could have started accumulating vm since announcemnt to aquire.
does sprint have to announce any vm shares that sprint may have purchased on the open market
could sprint already own 51% of vm?
what I see in the stock on a daily basis is being actively traded in a way that would seem to shake out small guys...there may also have been fair bit of fund year end tax selling and profit taking....in that mix and if the big holders were sitting tight...it's not hard to see a scenerio where s is able to buy back s shares....
also...with the exchange imbalance now between s and vm, it would seem vm holders would natually sell...as noted they are better off selling vm rather than waiting for the merger....
I think the key question...first asked by vlad is.... where are the shares of s for the exchange coming from....
I haven't seen that there is a new issue...ie. dilution.....
This is the problem with stock price having fallen so low. It "establishes" the price regardless of the actual worth. The stock no longer trades to reality just like when a stock is hot and frothy at the high end. $3 for Sprint is trading like it's going bankrupt soon.
The sad part is that may eventually come true if it goes on as it indicates an inability to raise capital in the capital market of which the stock market is an important part. Ironically, Sprint bankrupt and broken up is more valuable than Sprint as an ongoing entity right now as measured by market cap. Company stock is an important asset just like it's being used to acquire VM. Sprint is crippled by its low stock price.
That is why management compensation MUST be tied to stock price and aligned with shareholders' value. Someone notes that Dan Hesse has been the CEO going on two years now.
That is sufficient time for a recognition of the leadership's worth to the company.To turn a business around frequently requires a change of management or ownership.
Look at Hp as a prime example.It wasn't that Fiorina was doing a particularly bad job.It's just that it took new leadership to unlock the true worth of the business.
please read the other post I just did...I think you just hit on something as did vlad....
as you noted the stock is an asset but....s needs that asset to buy vm stock with...why dilute it when you can buy it at the cheap price right now........which they will use to exchange with vm which they are also likely buying up cheap.....
I think there's something to this theory....
Someone notes that Dan Hesse has been the CEO going on two years now.
That is sufficient time for a recognition of the leadership's worth to the company.
To turn a business around frequently requires a change of management or ownership.