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Technology Stocks : Microprose, MPRS
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To: Bret P who wrote (505)4/14/1998 7:00:00 PM
From: Bonzo  Read Replies (1) of 633
 
Virginia Turner responded to my inquiry about moving down to the Small Cap and comments I made about the ill-fated GTIS merger.
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From: ir@microprose.com
To: Bonzo3@aol.com

A couple of concerns about the Nasdaq small cap tier:

1. Some institutions can not buy (or hold, if they already own) stock from the small cap markets. This has some limiting effect on potential investors though it's hard to say how large a problem that could be. At the moment institutions own about 60% of our stock.

2. Many investment firms don't follow small cap stocks and have almost no research on them to encourage potential individual investors to purchase stock in the company. The company's visibility is much lower for the investor who is looking for recommendations from a broker. So if institutions can't buy the stock, and individuals don't know about the stock, we wouldn't expect much interest in the stock in either of these segments. Individual investors (other than officers and directors and employees) now own about 25% of the stock.

3. Trading costs for low-priced stocks are a relatively high burden.
Let's assume a $20 commission for a trade of 100 shares, or 20 cents per share. For a $2.00 stock, that cost adds an additional 10%, a net cost per share of $2.20. For a higher priced stock, that same commission of 20 cents per share represents a lower percentage cost per share.

4. As for management's decision to pursue the GTIS merger, the board of directors and officers obviously felt at the time that the merger made sense in light of their fiduciary responsibility for the company.
Hindsight is always 20/20 vision.

Virginia Turner, Investor Relations
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