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Why isn't BKS doing 100% spinoff. They can charge/share the cost of buying and storing inventories for the new Internet company. BKS will receive rev/earnings from NetBKS and all the money they are losing promoting the Internet will be gone next quarter. The new Internet company NETBKS.com will be valued similar to AMZN.com and NETBKS without BKS can spend as much as they want promoting the new company on the internet. Top line GROWTH. By keeping 80% of the new company BKS will make valuation of the NETBKS.com linked to BKS stock price. ATT spinned off LU, I don't see why BKS can't spinoff NETBKS.
Exactly my feeling. If you are only going to sell 20% of the business to the public you are not really doing a public offering. It is just paperwork. Every expert will be screaming about it and the stock will be viewed as the same as BKS (which it will be).
The reason for IPO spin offs is to give the business independence. So that you are not tied to the government of the parent business and you don't have to turn profits over to HQ. If BKS owns 80%, BKS will call the shots, BKS will take the profits, and it means there is no real IPO.
This is like IBM doing a IPO for the company lunch room on the 12th floor of their corporate HQ.
Will a shareholder of bks get any stock in the new company?
Also, just so I understand this better does this mean that bks will be a completelely separate legal entity in whihc bks just happens to own 80% of the stock? In other words on bks income statements once this transaction is completed one will not see any revenue or expense numbers? Isn't there some limit to the amount of a company another company can own without having to report it's number as a subsidiary in consolidated statements?
Good questions. I was an employee at The SABRE Group when it was spun off from American Airlines. AA kept 85% of the stock - 15% was spun off to the "public". Ended up being a great deal for AA - not so great for the "public" yet.
I see some potential frenzy- it is after all the internet. Will it last? Should you buy it for the long haul? No- I don't think so. But as a short term investment, I'd say it has a better than average chance of success. I just bought a book from them yesterday.
I would just like to share with all of you my target of 200 on BKS- I arrive at this based on the fact that AMZN is worth 400 - because BKS actually makes money, they are of course not worth as much. I assume a 50% penalty is adequate, when factoring in Mgmt's abysmal lack of foresight in not losing money- thus I arrive at my 200 dollar figure.
My other stock targets are as follows- 100 on PAIR 400 on iom (money loser=good) 100 on Cien 100 on psft 200 on hal hey I like round numbers- just call me Abby the unknown