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Technology Stocks : Zitel-ZITL What's Happening
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To: CalculatedRisk who wrote (8758)7/15/1997 10:38:00 AM
From: doug doan   of 18263
 
Other Earnings manipulations

To add to your points I might suggest the following:

1. By my calculations the earnings drop due to low CASD sales will really show up this qtr. The Poor CASD sales is afterall the reason why the #2 was realeased eary this spring. Coupled with poor CASD sales is the cumulative effect of lower sales of the storage devices on royaly payments. A year ago Zitl got royalties of several million a qtry. My estimate is that those royalties will be almost nil this qty. Hemnce I believe your estimate of -.60 a share was optimistic. My estimate is closer to -.75 a share

2. However, i do think there are still some other rabbits they can pull out of the hat. They can decide to sell the 1,000,000 shares they have parked without any shareholder approval and dilute the holdings. This will not change earnings at all but the dilution should result in a small loss per share. My guess is they will do it this qtr or at latest next.

3. Following the dilution logic. I noticed they have parked another 1,000,000 to 3,000,000 shares for the Caymen deal. Not sure what the legalities are but if they decided to include these new shares in the overall mix the same thing will happen. Same earnings but lower loss per share since there are now potentially another 3,000,000 shares.

4. No matter how you cut it the earnings are going to be real bad this qtr. and likely to be much worse in 4th. There is no possible way they can escape losing $1 per share by years end. This for a stock that the hypsters are still estimating to earn $1 per share.

Hard to figure.
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