WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 168.90

+4.9%

Dec 5 9:30 AM EST

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To: Ausdauer who wrote (7844)	10/27/1999 6:12:00 PM
From: Art Bechhoefer	Read Replies (1) of 60323

Other companies have handled the need for additional capital by private placement of convertible preferred stock, by short term borrowing (usually with a 9% or higher interest rate), or by convertible bonds maturing in about 10 years. It's possible that SNDK explored raising debt but found the terms were unfavorable compared with the issue of common stock. The only thing that can be said in favor of common stock is that a successful secondary offering would be an indication of investor confidence. Still, if the company receives less than $50 per share (net), I think it's not a very good deal. Remember that prior to the stock dropping last year, it was hovering around $28 per share (after dilution from a level near $40). Putting it all in perspective, the stock hasn't even doubled from its plateau in the late spring of 1998, while revenue and profits have mushroomed. Institutional investors will have a field day if they can get these shares under $50.

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