Selling Stocks?

Question

My company was just purchased by a bigger company, should I sell my stocks or should I let them convert to the bigger company's stock? Currently my company's stock is worth more than the buying company's stock. What should I do?

Okay, here are the details about the purchase of my company.

http://biz.yahoo.com/seekingalpha/070318/29835_id.html?.v=1

Answer 1

Now that you're telling us Cisco is buying your company, I'd say dump Cisco. Webex was a more dynamic company with a lot more room to grow, and the stock market rewarded it by bidding its price up almost to the pre-crash peak. Cisco may be a great company to work for, but the market has decided it's a fallen giant (along with Intel and the other big tech darlings of the 1990's). It's about 1/3 the price at its peak. I think it will be out of style for years to come. If you really think you can survive at Cisco for 20 years or more and you have a sentimental attachment to company stock, then it will probably come back into style some time in there and you will do all right.

As a general rule, you should never have significant exposure to the company you work for, especially after a buyout. Your job is in jeopardy the moment new management takes over (unless you have a corner office and a good contract). If Cisco underperforms and you lose your job, your stock will probably be taking a hit at the same time.

Good luck,

Houyhnhnm

Answer 2

Well - it really all comes down to future market expectations for the value of the stocks.

That's how the stock market works - whatever the "future perceived value" of the stock is by investors is what will determine its price.

So the key is to take a look at the new (bigger) company and try to determine whether it is a company that is looked at by investors as being one that is going to have a lot of future growth. If it is, then hold on to your stocks.

But, if you feel that there are other companies out there that investors seem to be thinking will have better future growth, then you should consider selling your stock and buying into one of those companies.

Now, one final note, in my opinion, is that typically bigger companies are going to be more diversified. And therefore there are many more ways that they can make (or lose) money than a smaller company.
That tends to "dilute" the value of the stock and cause it not to grow as rapidly.
Because, for example, the one really hot product that they now own as a result of purchasing your company is now offset by the other products they have that may not be making so much money.

Hope that helps

Answer 3

It is not worth more - stock price alone tells nothing. The only thing to decide is if the prospects for the new combined company are good or not. If not - sell. If you have too much invested in just the 1 company also sell so you can diversify.

Answer 4

They probably aren't going to swap it one-for-one.

If your stock has a higher dollar price, then odds are that you will get more than one share of the acquiring company's stock for each stock share that you own. If the deal is finalized, it doesn't matter. The market will have bid the stocks into parity. If the deal is still being negotiated, you might want to hang onto your stock. Generally the acquiree is given some type of premium.