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I have been fiddling with the numbers to adjust for the recent acquisition by BOBJ of Crystal Decisions and I keep scratching my head. If I set the expected p/e multiple on their stock to be equal to that of Cognos, I get a stock price of about US$26 not the whopping US$37 that it is trading at present.

Am I missing something?
Have I done the math wrong to adjust for the increased earnings and stock dilution that go along with the Crystal acquisition or is BOBJ vastly over priced?
Are the synergies that Crystal is supposedly going to deliver so great?

I personally can't see any synergies in the Crystal purchase. They paid US$800 million of which US$300 million was in cash. I can't help wondering what Thom Weatherford thinks of this deal. If you have tracked BOBJ over the years, you will know that BOBJ went from a market cap of US$2 billion to US$700 million after Weatherford retired. Could the Crystal purchase be the sort of fiscal foolishness that investors were spooked about a year and a half ago?

The fact is that people leaving does not tend to have an immediate effect. If you consider that, consider this. I think that many of the sale staff in the US operations will agree that Bill Robinson was responsible for the steady growth of BOBJ's sales in the US. Bill left to work for Actuate about two quarters ago so I am betting that the effects will start to be felt in the next two quarters.

Another thing to consider is the whether merging companies ever works and if BOBJ has ever been successful at it. If you look back you will see that many mergers have been absolute pigs that never delivered the value promised. In BOBJ's case, ask the question "what ever happened to Olap@work". BOBJ bought this great little company and then flubbed the integration of the two companies.

In general, I get the impression that there are two many tech dollars for too few outstanding performers and we are seeing a mini bubble as a result. Lets face it a 53 times e/p ratio is real dot com stuff.

What do you think?
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