Has This Poison Pill Lost Its Bite?

Shared Medical Systems is one of the few computer-information companies whose shares haven't declined recently. The stock has stayed close to its high of 21, even though management just installed a shareholder-rights plan that makes it expensive for any unwelcome group to acquire the company. In early January, Shared Medical Systems traded at 13.

But an insider says that several directors have changed their minds since the poison pill took effect on May 1, and they may now welcome an offer. One investor group is shopping the company, a leading provider of computer-based information systems to hospitals, clinics, and physicians. The group led by David J. Greene, a New York investment firm, has a 10.6% stake. Greene thinks the stock is undervalued and believes the only way to boost the shares is to sell the company. Some takeover pros value Shared Medical Systems at more than $30 a share.

One 13D Research analyst says the company has "an extremely strong franchise that's recession-resistant" and a revenue base roughly two times that of its closest competitor. After a slowdown in 1989, earnings picked up last year, rising to $1.01 a share from 79~. The analyst expects earnings of $1.20 this year.

So far, Greene won't talk about the search. But some big investors bet it will come up with a buyer soon. Shared Medical declined comment.

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