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Technology Stocks : IDTI - an IC Play on Growth Markets
IDTI 48.990.0%Mar 29 5:00 PM EST
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To: thom who wrote (4250)10/16/1997 9:10:00 PM
From: D. Dreon   of 11555
 
Much to my chagrin, IDT's shares outstanding are fluctuating quite a bit. In IDT's case it comes from the employee stock purchase plan, management incentive options, or the convertible debt.

The first case is immaterial.

In the second case, management put on the annual ballot, a hefty option plan for themselves. I voted against it. I am against management stuffing their pockets before they return shareholder value. Only the other way around works for me. From my recollection, it was somewhere between 3-4 million shares. I don't know if the measure passed -- anyone? If it did, they will have added it to the fully diluted number. FACT: IDT's shareholder returns have significantly trailed the semicon index for the last five years. IDT=450%; DJ Semicon Index=689%.

In the third case, IDT issued convertible debt -- I believe in Fall '95. The value of the embedded option stripped-out from the debt instrument must be included in the diluted shares outstanding. The paradox here is that as the stock price rises so too does the value of the convertible option. Management must mark-to-market the option value and add that to the diluted shares outstanding. As the stock price rises, expect the shares outstanding to do the same.

I tried to get more details from IR, but they didn't understand a word I was saying. I later called BB. He never returned my call. Call the CFO directly. Who would that be?
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