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Non-Tech : Iomega - A Civil Discussion
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To: d-fndr who wrote (1846)7/25/1997 3:43:00 AM
From: fut_trade   of 1908
 
RE: Outstanding shares

Question:

In Q1 Iomega bought shares back at an average price of about 15.25 and sold approximately an equal amout back at a higher price in Q2. Does Iomega plan to continue to increase the number of outstanding shares in Q3 and Q4? Motivations to do so could be to raise capital as Iomega becomes cash flow negative to fuel expansion.

With more than 18M short shares, Iomega could trade shares with the shorts keeping the supply of available shares on the market constant thereby keeping the share price 'stable'. However, EPS will decrease tending to increase P/E, both of which will have a negative effect of share price.

Obviously, increasing the number of outstanding shares greatly reduces the chance of a short squeeze. However, the increase in capital will aid Iomega's expansion potentially increasing future earnings. Any comments?

Peter
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