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Technology Stocks : Quarterdeck: Making a Striking Comeback!
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To: Jesse Livermore who wrote (2211)1/14/1998 10:13:00 PM
From: DS  Read Replies (1) of 3307
 
As a holder of qdek and frequent reader of this board, I must say thanks to everyone for their insight and information. It has been very helpful. However, something just doesn't make sense to me. Today I received the 10-k in the mail and read about the details of the convertible preferred shares. In many previous posts, much of the weakness was blamed on their "cartel" and their desire for a lower stock price into March98. I believe this view to be incorrect and actually they would want the price as high as possible over the next few years. Let me explain : the cost of each preferred share was $1,000. If they covert at $1/share they would receive 1000 shares (for each preferred 1,000/1 = 1000). Assuming little very short term change in stock price, they would own 1000 shares of a $1 stock = $1000-not a very good return on their original $1000 investment (actually return would be less due to conversion at 101% of avg over xxx days etc....). If they convert at $2/share, they would own 500 shares of a $2 stock = $1000 - same result. But if share price goes to $10, they would convert at around $5/share-buying 200 shares with a mkt value of $10/share would = $2000 - now that's what I would call a return on the original $1000 investment. Also, as most of you know from options, the holders of these covertibles would not want to convert early (unless they "needed" to sell) until expiration was near because of the "time value" that remains in the preferred shares previous to expiration. Does this make sense to anyone else or am I reading the situation totally wrong ????

DS
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