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Technology Stocks : Leap Wireless International (LWIN)
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To: A.L. Reagan who wrote (2393)7/18/2002 7:53:26 PM
From: Dave  Read Replies (1) of 2737
 
A.L.,

The original business model did not work. In order to become profitable, NXTL had to issue equity in order to retire the debt.

If you, as a shareholder of a company, like to be diluted, that is fine. Yes, while Nextel did report a pro forma profit, the increase in outstanding shares represents a drag on Nextel's future EPS growth.

Do you think that had that happened today's price would be $1.39?

No, it would be much lower than a $1.39. In my opinion, this example represents basic economics of Supply and Demand. If Supply increases while demand remains constant (or for the Wireless Sector, demand overall is decreasing for equity), the price will go down until equilibrium exists.
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