16 November 2010

Time dotCom needs more TIME?

After 2 days of suspension and an announcement, Time dotCom (TdC) slides 18% to RM0.63 today. In conjunction with that, TIME - the mother of TdC - also join-in to close down 16% to RM0.435.

Actually, what is so bad about the announcement? Prior to the outcome, both counters jump up in anticipating of good news. Anyway, it looks like investors are jumping blindly before this.

The announcement by TdC:-
  • Buy Global Transit Communications (GTC) for RM106 million, the wholesale Internet service and back haul provider
  • Buy Global Transit Ltd (GTL) for RM105 million, which owns 10% of trans-Pacific submarine cable
  • Buy AIMS Group for RM128 million, owner of network-neutral data centers in the region
  • Capital repayment of 2 sens-a-share
To finance the acquisitions, TdC will pay RM90.9mil cash and the rest in new shares. The deal was expected to enhance TdC's earnings straight away, transforming TdC into a regional telco player, and over-taking other competitors.

Why still falls after such a good news?
No one knows the main reason behind. And, Finance Malaysia makes the first comment regarding this, and the main reason was - No More Story. In other words, all the good news have been factor-in before the announcement, and as such, No More Story will be bad news for this company. The last investor who jump in will be the hardest hit.

It was not surprise, because the deals involved so many parties and people, the so called "insider news" would have leaked out much early. Investors keeps on pouring in their hot money to participate, but, the smart one has started to cash out.

By looking at the deal carefully, there was new shares being placed out.
The question is at what price?
And, how to determined the price?

Ah...ha... According to it, the price of new TdC shares that will be issued to the vendors of the companies is 72.3 sen each, based on the 5-days volume-weighted average market price of TdC shares. You get what I mean? If the shares shot up and traded actively before the announcement, the price of new TdC share that will be issued would become higher.

Good Luck on your next target...

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