Cable Forum - View Single Post

Chris Norris · 03-04-2006, 22:47

Most of the money will actually be in the form of shares, giving Branson a 13% stake in the new company.

There will be a few hundred million in cash involved, but the way large companies work this isn't just money sitting around that can be spent on other things. Investors are interested in "operating profits" which would not include money spent on acquisitions, which would appear as one-off charges in the accounts. Essentially, if the money were spent on upgrades it would reduce the perceived* profitability of the core business while this would not.

* of course we could argue ntl will need to invest in hardware in the long-term in order to remain profitable, but unfortunately this is the state of anglo-american corporate governance.

Chris

03-04-2006, 22:47	#124
Chris Norris Inactive Join Date: Dec 2005 Posts: 12	Re: [Merged] ALL Virgin / NTL merger discussion Most of the money will actually be in the form of shares, giving Branson a 13% stake in the new company. There will be a few hundred million in cash involved, but the way large companies work this isn't just money sitting around that can be spent on other things. Investors are interested in "operating profits" which would not include money spent on acquisitions, which would appear as one-off charges in the accounts. Essentially, if the money were spent on upgrades it would reduce the perceived* profitability of the core business while this would not. * of course we could argue ntl will need to invest in hardware in the long-term in order to remain profitable, but unfortunately this is the state of anglo-american corporate governance. Chris