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Technology Stocks : Osicom(FIBR)
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To: David Pawlak who wrote (5584)2/28/1998 7:40:00 PM
From: Grantcw  Read Replies (1) of 10479
 
David and all,

I hate to bring this question up because it may have already been addressed over the last few months. I may have bypassed this because I didn't really know the nature of what everyone was talking about.

My question concerns our outstanding convertible preferred stock. It seems that Osicom has been issuing floorless convertibles over the past year to fund its operations. I've recently been interested in shorting companies with lousy operations and balance sheets and have found that one of the best ways to find a company that is soon to hit its bottom is to find one that has issued floorless convertibles. I've seen numerous examples of companies that have issued these things only to have the holders of the convertibles short the stock into low levels in order to get more shares upon conversion.

I don't think we have really discussed this fact as one that could have caused the stock to plummet in the first place down to the 2s that we saw in the latter part of 1997. IMO, the worst is over. We are definitely on a strong uptrend and I would assume that the shorts have covered in large part. My main concern is that the convertible shareholders may have accomplished their plan by converting large amounts of stock when we were at 2. If they did, Osicom may have another very large increase in its shares outstanding this quarter which would severely hinder the company from making its estimates.

In the long run, I see this company making tons of money with the Gigamux and Net+Arm, and I don't mind sharing part of my gains with a few more shareholders. The problem is the short-term earnings and the impact a miss of estimates could have on the stock.

Does anyone have any guesses as to the amount of shares that could have been converted when the stock price was languishing?

I bet that Craig will. Wonderful...

Thanks,

Grant

BTW, If I'm wrong with any of my data, please correct me as I'm not an expert on this subject.

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