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VeriSign, Inc. Message Board

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  • emclu emclu Jan 10, 2006 6:57 PM Flag

    All the technicals look good 4 vrsn eom

    Dude, the buyback hasn't even started and may not happen. Their sitting on that cash. Do you own DD
    before you short. Cover your short position now before tis stock takes off.

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    • Dude, these assertions are simply not correct. Take your own advice about DD and look more carefully at the 11/21/2005 8-K filing.

      The buyout has (or had) three stages. The first is VRSN paying Morgan Stanley for delivering the shares, which had already happened at the time of the filing. So VRSN isn't "sitting on that cash." This phase is complete.

      The second is MS buying shares to replace those it borrowed for delivery to VRSN. By binding legal contract, they *must* do so. There is literally no possibility of "may not happen." MS may have sat on the cash initially received from VRSN for a time, but there's almost overwhelming evidence that they have now covered a significant chunk of their short and a distinct possibility that they are done.

      The third is that when MS has fully satisfied its obligation, VRSN may request a rebate on the per-share price they paid MS up front ($23.14) if MS was able to obtain replacement shares at a lower average price. If there is such an adjustment, VRSN can elect to take it either as additional shares to retire, or as cash back. When and if this final, optional phase is either complete or rendered unnecessary, VRSN will file an additional report (either another 8-K or a note wrapped into a 10-K or 10-Q) on the final outcome of the accelerated buyout.

      While the length of the window allowed to MS to complete the second and third phases was kept confidential, I believe it's likely that we'll see this report on or before the next earnings release. But that part is just my opinion.

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