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Technology Stocks : webmethods
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To: bh who wrote (43)2/7/2000 3:24:00 AM
From: Edwin S. Fujinaka  Read Replies (1) of 103
 
If you read the prospectus, it appears that the new investors at an assumed price at the ipo of $12 will suffer an immediate dilution in book value down to $2.77 (see page 18). That is because there are already 25 million shares of stock in the hands of insiders who paid only an average price of $1.54. This IPO is only for 4,100,000 new shares. In addition, there are some 6 million warrents outstanding which will allow the warrent holders to purchase shares at an average price of $2.19 thus futher diluting the book value. The potential for dilution of the value of the stock that you are paying for seems pretty severe. Good luck with this investment.
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