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Gold/Mining/Energy : Direct Focus Inc. (DFXI)
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To: trilobyte who wrote (425)3/4/1999 11:07:00 PM
From: Gordo  Read Replies (1) of 768
 
Trilobyte

<I'm kind of wondering that this secondary is more
of a vehicle to get DFX known to a wider (US) pool
of investors than anything else>

There are only two reason that DFX would use a public offering rather than merely applying for a listing on a US exchange. The first is if they need the cash (which they likely don't as the Bowflex product is still spinning out lots of cash, and the Nautilus acquisition was done with cash on hand. Last time I talked to Rod, he suggested that the mattress product would cost less than $1 million to launch so they don't need cash there either. The only place the might need some cash is if they are doing some major surgery on the Nautilus division).

The more likely reason to do the public offering is to gain a wider US following. The underwriter will be forced to promote the stock in order to sell the offering, which is a healthy way to start life on a US exchange.

Even though $25 million may not be a lot, I do question what they will be doing with it - I hope Nautilus doesn't require THAT much surgery. And it certainly won't do any of us any good having the cash sitting on the balance sheet.

Here's a radical idea - how about a share buyback to reduce the dilutive effects of the public offering?
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