Patience Pays Off For Mercury Investors

Article Excerpt

MERCURY INTERACTIVE CORP. $50 (Pink Sheets Over-the- Counter market symbol MERQ; Aggressive Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Extra risk) dropped from $40 in July 2005 to around $23 in November 2005, after errors in the way it accounted for stock options forced it to restate its results back to 1992. After the huge drop, we advised aggressive investors to hold the stock. We felt Mercury’s unique web site testing software could attract takeover offers from larger software companies, once it straightened out its accounting problems. HEWLETT-PACKARD CO. $32 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Above average) has just agreed to buy Mercury — for $52.00 a share. The total cost of $4.5 billion is 2.8 times the $1.6 billion or $0.54 a share that Hewlett earned before one-time items in its second fiscal quarter ended April 30, 2006. Mercury stockholders should hold on to their shares, and tender them to get the full…

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