S3 (A LONGER TERM PERSPECTIVE) Message Board

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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE)

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May 12 5:00 PM EST

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To: Mike Learner who wrote (9079)	1/28/1998 11:27:00 PM
From: JAG	Read Replies (1) of 14577

bob, Please help me. I do not understand. If you sold 3,000,000 shares short at say $20 and stock is now five and you cover, would not you make a cool $45 million. Why wait until the stock reaches $10 and lose a $15 million of this profit. I suppose one could argue that the note holders are attempting to offset the credit risk of the $100 million in unsecured notes against the possiblity of bankrupcty and the stock being worthless, but I think I would cover at this point and take the $45 million profit. As a matter of fact, I think S3 would jump at the chance to pay the bond holders off at let us say a 70% discount to the face amount of the notes. Bondholders then receive $70 million and cover short and pocket $45 million. Meanwhile they have collected all of their interest. Bob, think about this one again. Something does not add up here.

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