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Technology Stocks : General Magic
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To: John Madarasz who wrote (9811)10/21/2001 9:54:18 AM
From: Fred Gohlke  Read Replies (2) of 10081
 
JM, I'd like to offer my uninformed opinion that it is as much an assertion of viability as anything. That viability would be important to a potential buyer, but it is also important to the current equity holders.

I've chosen to interpret the repayment schedule as a conservative estimate of the anticipated ability to pay. In other words, it struck me that, in arranging closure of the predatory financing, the company scheduled payments they expected to be able to make. If their estimates of cash flow are good, they've left themselves in a position to grow. If they fail to attain the anticipated level of income ... turn out the lights.

Please understand that I couldn't read a balance sheet with both eyes. However, I see a company struggling under adverse conditions and taking the slow, plodding steps necessary to recover. Nothing in the opinion I'm expressing says they'll succeed. But I can say, with great certainty, that any other approach would fail.

Fred
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