Joe,
I have never owned Brocade stock, and have never shorted anything in my life.
I did post a few messages on Yahoo a few months ago, asking some questions about the SUNW warrants. Of course, I was immediately branded as a short, so the discussion was brief. (My screen name was not one of the more notorious ones, and I haven't posted since that time.) To his credit, one Yahoo poster actually took the time to ANSWER MY QUESTION in a reasonable way, and convinced me that the effect of the warrants would not be financially detrimental to Ancor itself. That was a very important point, although that wasn't the only reason I dislike the warrants. Here are my thoughts. Take them for what they are worth.
1. I think the danger exists that as Sun revenues ramp, along with the attendant sales discount, those investors who do not understand the difference between GAAP and Pro Forma accounting methods, will simply see wider losses. That could make them sell, pushing down the price. This becomes less of an issue if Ancor has other, non-warrant type OEMs to offset the sales discount, but so far we haven't seen that.
2. It is a concern that other customers will want a similar, sweetheart deal, and if they don't get it, will go elsewhere.
3. For me the biggest reason I don't like the warrants is this. If Ancor's product is so superior, why do they have to provide any incentive AT ALL! Why can't the technology and the company STAND ON ITS OWN! This has been a burr under my saddle ever since the days of the floorless convertible that ballooned the number of shares. Ancor should concentrate on selling switches, not stock.
Craig |
