"Now this would be alright, because in effect the company would have simply made the decision to leverage itself -- issue debt and use the proceeds to buy stock. The sticking point is the fact that they used convertible debt to accomplish the leverage. This begins to smack of financial engineering."
CTC,
Normally I would agree with you completely. But I've been following CTXS for at least three years now. And I have to say, they tend to, "fall into it." (Please no flames from diehard CTXS fans. It's just an opinion).
It's almost like the company continually shoots from the hip. On one hand it's frustrating, but on the other, the thin-client paradigm opens up new markets that are very hard to predict. I do have to say, when a market opens up, CTXS seems to pounce on it. I started to mention this previously with the convertible-->share buyback post, but decided it wasn't pertinent at that time.
To be honest, I think they did the debt offering, not knowing fully what they were going to do with the large amount of cash generated. Well conincidently the stock price started to hang up and I think they just saw an opportunity and grabbed it. I really think this is all there is too it.
I know it doesn't seem possible with a sum as large as $300 million, but as I've watched CTXS develop over the years, it seems to be how they operate. Another positive way to look at them is, they are very quick on their feet<G>.
MikeM(From Florida)
PS Thanks to both you and Peter for your informative posts. |
