rci: You are looking at the past trend in earnings, but I believe that could be the wrong approach to take. The proforma data on the S4 shows a quite different picture:
LUNN will earn .91 per share (new) vs. .06 (old), i.e. .60 (new basis), a gain of 50% on earnings. Lunn shareholders end up with 1.46 of the 3.54 mil. shares, or 41% of the company. (This does not take into account the 1 mil. preferred shares transferred to the new company from TPG, possibly a negative factor.)
Also, these figures are before possible adjustment for declining income by TPG next April in the event that TPG income falls short, a form of declining earnings protection for LUNN shareholders of record prior to the merger.
If we buy into the statements by management that the merger will result in vertical integration economies of scale and cost savings, earnings should improve, not decline.
As previously posted, I do not presently own any LUNN shares, but am watching the behavior of the stock. Volume continues to be low, thusfar, which I interpret as a negative for the short-term performance of the stock. A retracement from the 1:10 reverse is still in progress, in my opinion. These retracements often result in at least a 1/3 decline in price. So, my target for entering this stock is about $10 to $11. We have almost arrived and I am looking for signs of increasing volume with a reversal in trend. If there are any technicians on board, I would appreciate some posts as to what the indicators are showing.
Lee |
