You're forgetting that there's a value added benefit involved here.
It's not like they're diluting just to raise money.
They are getting some vital assets and patents, as well as almost $6 in cash on hand to offset $5.5 in debt.
It's not really dilution.
This, from a 2014 article:
By Muhammad Bazil
November 26, 2013 |
Alcatel's huge patent portfolio
IP routing is one of Alcatel's major assets, and as such it is highly unlikely that the company is ready to monetize its 30,000 plus patents in the context of a merger. Analysts estimate that Alcatel's patent portfolio of has a value of $5.4 billion-$12.2 billion. The portfolio is currently secured in part by the collateral of a $2.2 billion debt deal with Goldman Sachs and Credit Suisse. Although the loan terms are undisclosed, it is highly likely that Alcatel faces significant limitations on patent policy, particularly with respect to licensing. Simply put, in a possible Nokia-Alcatel merger, the Finns would have to pay a fortune to become the new licensees, provided this is permitted by the loan terms.
That will be treated as a surprise while everyone thinks $1.2 is the amount.
That surprise alone should boost the share price a buck or two!
This news implies something is s done deal.
Either the HERE sale at a formidable price, or a Samsung ruling/settlement.
Either way, Nokia is getting lots of $$$$$$.
There is an EXCELLENT article on zerohedge regarding the breakdown of GE Capital and the remaining divisions, and how the funding will be done.
Not a negative article from what I see.
I'm NOT freaking short!!!!!!!!!!!
I have no position yet, but looking to get in.
What's with all you people on this board?
I've come to the conclusion you're all paranoid.
Not worth being here.
I've been burned many times getting in at the open.
I'll wait to see how it plays out this morning.
Even the crew on Fast Money have a 3 day wait when news is announced.
I only asked because I read that their cash flow will be largely impacted by the sale. But, what you say makes sense.
One other question....I've been nervous about this market in general. That makes me a little hesitant.
Will GE buy back the shares immediately or will they wait for a market correction?
Any ideas? Hate to miss a nice investment opportunity by waiting for a pullback that may never come. But from what I've been reading of late, many big fund managers are nervous (Mohamed El_Erian, Julian Robertson, Jim Paulsen, Richard Duncan, etc) and most stocks seem to be rolling over.
No.....in fact looking to get in.
Don't get your feathers ruffled when someone asks questions.