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Biotech / Medical : Summit Technology (BEAM)

BEAM 23.57

-2.9%

12:00 PM EST

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To: Ken W who wrote (1319)	8/9/1999 12:36:00 AM
From: Carl R.	Read Replies (1) of 1386

As an example of a company that made an "appropriate" secondary, look at VECO. Despite the fact that they have been consistently profitable, they made several acquisitions during 1997 and 1998 that depleted their cash, though it didn't put them in a borrowing situation. Their stock moved up in January and they quickly announced a secondary to boost their cash. The stock fell from 60ish to 52 by the time of the secondary, and now trades at 30. But they sold a million shares at 52, and now have enough cash for additional acquisitions as they become available. The million shares is not very dilutory as at 3% the $50 million they raised earns $1.50 per share, approximately what they will earn this year on the other outstanding stock. Thus the acquisition was nicely done, and of long term benefit to shareholders. Note however that it was not favorable to them in the short run. <VBG> Usually the broker(s) doing the secondary will issue upgrades and reiterations during the secondary period, trying to support the stock, but usually the stocks seem to fall anyway. The thing I can't figure out is, why would anyone ever buy a secondary? Carl

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