Maybe because the interest rate/ bond value is an "inverse function," which may "freeze" some peoples brains. But really, I do not know.
Interest rates have only one place to go and that is up. The Fed has already telegraphed that they are going to start to raise interest rates. You can quote Buffet all you want; rule number one is: Do not fight the Fed!
As interest rates rise, bonds go down, lose value. Before you start investing in bonds right now you better understand how the game is played. I am completely out of bonds and I recommend the same for investors.
Joel West wrote on October 3, 2012 in his Seeking Alpha article: "I would presume that DT hopes that it will be able to gradually unload its 74% holding in the combined company through open market sales."
It is expected that once the transaction is completed the ticker symbol for PCS will change "since T-Mobile USA will retain its name, technology, HQ and CEO - while MetroPCS will lose all four." (West)
So, re your Q's:
1. As little as possible, since DT is probably going to "gradually unload its 74% ... ."
2. This is the $64K question; the only answer right now is "Mr. Market" is valuing the deal at $10.90 for each PCS share.
3. Linquist has sold 1M shares of PCS over the last months; he still holds about 4M shares, but if this deal is good for PCS shareholders why is he selling his shares?
I sold my shares in my taxable account yesterday to avoid the tax consequences of the cash payment (which might be a reason Linquist is selling his shares- but then why have the dividend in the first place?).
As for voting for my shares in my retirement account, I do not know, but I am leaning toward "No."
On November 30, 2012, Shing Yin, an analyst at Guggenheim stated that Sprint could make a new offer for PCS between $12 to $13, which he calculates would equal about a 45% stock offer from T-Mobile instead of the current 26% per the current T-Mobile/ PCS deal. Thus, Yin believes PCS is worth about what it is trading at on 11/30/12, about $10.65 a share in the current T-Mobile/ PCS deal.
because Yahoo is deleting messages:
I posted on this thread that Moorman at S&P has a $12 target price for PCS and that S&P's quant model has a $12.10 "fair value" for PCS as of 11/5/12.
1. Price action today and huge volume say "someone" thought Softbank was going to make a bid for PCS, apparently not, for now anyway;
2. Per Linquist this week PCS is scraping VoLTE; I think their foray into VoLTE was an attempt to deal with PCS' spectrum issues, and it showed that PCS just did not have the spectrum necessary for their G4-LTE network. Thus Linquist had to broker a deal with T-Mobile on less than favorable terms. This is pure speculation on my part.
James Moorman at S & P raised his PCS target price to $13 from $11 on 10/5/12; still has a "Hold" rating; values deal between $11.50 to $13.50 a share. He also said he thinks Sprint will not offer a competing bid for PCS.
William Power with R.W. Baird has a $12.60 to $16 value per share for PCS.
Craig Moffett at Sanford Bernstein has "an optimistic view" of $18, with the $4 per share in cash.
Walt Piecyk with BTIG LLC has a $15 to $16 value.
Taking out the high and low estimates provides a $13.40 value for PCS.
($12.50 + $14.30= $26.80; div by 2= $13.40)
you forgot the 1 for 2 reverse stock split: $24.89 div by 2= $12.45.
PCS closed at $12.65 last Friday, so there you go.
Craig Moffett at Sanford Bernstein & Co. said "(A)n optimistic view would value MetroPCS shares at about $18 in the transaction, including the cash."
"Walt Piecyk, an analyst with BTIG LLC in New York, said the merger values MetroPCS at $15 to 16 ... ."
Both from Bloomberg: "Banks May Split $50 Million Advising on T-Mobile-MetroPCS Merger."
I do not know if your math is wrong, I am long PCS and I hope its right.
However, "Mr. Market" says your math is wrong.
10/2 close was $13.57.
We are down about $0.71, to about $12.85. Either Mr. Market does not understand this deal or has a different valuation of it than you do. Linquist still owes about 5.3M shares of PCS, so I do not think he would do anything stupid. Yesterday I thought PCS was worth about $14.50 a share. Interesting to see where we close today.
9/28 T-Mobile sold rights to it's towers for $2.4B, this was last Friday.
PCS has about $2.35B in cash. Together that is $4.75B.
ATT gave T-Mobile about $3B in cash plus another $1B in "assets" for the failed ATT-T-Mobile deal.
PCS has about 364M shares outstanding: 364 x $14.50= $5.02B. The deal by T-Mobile for PCS almost pays for itself.
also G.S. added 695K shares, or 189%, to hold 1M shares of PCS in Q2-12!!!
if do not work, its on page 3.
Article on Leap; comments by skibimanex are interesting:
"The investment community instead focuses on operating cash flow, what company calls OIBDA (Operating Income Before Depreciation and Amortization), OIBDA margins, free cash flow, and operating metrics (Performance Metric), that are indicative/predictive of future financial results."
Operating Cash Flow;
OIBDA (Operating Income Before Depreciation and Amortization);
Free Cash Flow and
Operating Metrics (Performance Metric).
This is fundamental analysis.
Compare with technical analysis, (reading the stocks price action on the charts.) See: Murphy, "Technical Analysis of the Financial Markets," and Kahn, "Technical Analysis Plain and Simple."
PCS Q2-12; 41 cents per share earnings on $84.3 million, versus 23 cents per share a year ago. Net income was $148.8. Revenue for was up to 6 percent to $1.28 billion.
Finally a good quarter!
I am not sure what "report" you are referring too. Here is the Q1-12 c.c.:
I do not see any reference to LTE being only "5%," if this the "report" you mean.
In fact the c.c states 45% of PCS subs have a "smartphone," but that does not necessarily mean G4-LTE.