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Technology Stocks : MER Telemanagement (MTSLF) - Internet/web Co.
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To: James F. Hopkins who wrote (60)4/27/1999 8:08:00 PM
From: Carl Wysocki  Read Replies (2) of 75
 
James, I have mixed feelings about this deal.

You're right that spin-offs are generally good for the spinee, but
usually after a period of 18-24 months. In the meantime, many
who receive the dividend won't know what they have and will sell,
temporarily depressing the price. I hate to see what happens to
the bid if a million shares are up for sale, but that will be an ideal time to buy. Seems like these days any trade of a few thousand
shares affects the bid or ask by 1/8 point.

The good news is that companies do these deals because they know
they don't provide enough focus, and a dedicated management team
can do a better job. I'm assuming that MTS is a mere pimple on
the Mer elephant and this is the reason for the spinout. No matter how well MTS performs, it'll never be meaningful to Mer, and so they
don't pay much attention to it. Reading between the lines, we might see a pretty bad CQ1 and a slow 2nd half,
but that's more a function of my skeptical way of thinking than
anything else.

I don't think this portends a takeover on the immediate horizon. If there
were an eager buyer, it'd be easier for Mer to sell out than to have
the acquirer go through all the expense and aggravation of a public
tender.

Now we just need to wait for earnings.
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