Straight and others,
Markman memo
generalmagic.com
Here is a thought about the stock price of GMGC. If anyone wants to refute what I have to say, please feel free to voice your opinion.
The Series C holders (C) have recently converted 50% of their shares (December 1998). They are definitely in the know concerning what is going on with GMGC. Much more than you (individual investors) and I. If it wasn't for the C, GMGC would not be in existence due to the C funds of around $30 million last summer. It is well known, that GMGC will need an infusion of capital to survive in the short or mid-term. It would make sense for the C to convert as many shares as possible (especially if the C think that GMGC will do well over the next 1 or more years) and at the lowest price. It wouldn't make sense for GMGC to offer a lower price to a new partner at a lower price than what the C could obtain (if I were a C, I wouldn't be to happy if some new guy on the block received shares at a lower price than what I had received).
Without looking in-depth at the latest agreement, referencing the new C conversion, it would seem to me that maybe the current price of GMGC is being artificially held low due to the C (IMHO). If you noticed, the C converted 50% of their shares at I think around 1.5 million or more shares at a price in the $5.9 range. Didn't the original agreement stipulate that the C could convert 25% a month starting in November and convert 25% a month. One hundred percent of the conversion could possibly done by February (If my memory serves me right, that could be around the 23 or 24 of this month). Also, the convert price would be around 115% of the lowest four trading days in which the conversion could take place. Remember, the $6 miminum price range (if anyone can add to the $6 minimum range or explain it in more detail, please do).
Now, to add to this situation, wasn't there a spike of aroun 1.5 million shares shorted (from around 4.1 million to 5.6 million) from December 15 to January 15. Why would there be such a increase in the number of shorts, especially due to the partnerships and potential of GMGC? Would this number not correlate with the remaining 50% of the C shares?
If I am right (I want to add a big IF, especially since the current price could very well be due to the history of GMGC, product, and current revenues), then I would expect the price of the stock to rise once the C convert all of their shares. This could possibly be as early as 10 days (possibly earlier if the C announce that they have converted all of their shares).
Once the C have converted, then hopefully the stock price will increase and then GMGC could receive their needed capital for less stock issued to a prospective partner (ie less dilution).
I am only one out of about 5 billion people, so take what I have said with a grain of salt. I welcome all comments and thoughts
Take care,
Kurt
PS Dwight- Sorry I can't answer your technical question (us dirt farmers couldn't tell you the difference between a UNIX, NT, or ATM machine:)). I was hoping that Otter would be able to answer your technical question. |
