Bruce, typically, in "secondary" offering, the houses will keep the market more or less "even" during the offering, but here, it is not an offering, so no underwriter is involved. I think that the stock will find its new "Trading range" (my guess, is actually that $6 will fold and we trade to the low $5 were we bottom, but that is just a guess). The company will announce an "effective date" for the rights and whomever own shares on that effective date will receive rights and will have to exercise these within the prescribed period. If the stock is at $5/share, then you are talking of doubling the number of shares outstanding to 80 MM shares. If the price is at $10/share, you are still going to get a dilution to 60 MM shares. In that range my old forecast of $75, goes to between $37.5 to $50 per shares, without taking into account additional "negative" possible developments. On the other hand, the strength of the SOX might be an indication that WFR do not know (or are "over conservative") what their profitability will be next year, and my old assumption that by the third quarter in 1999, they'll be profitable still holds.
Zeev |
