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Technology Stocks : Apple Inc.

AAPL 260.07

-0.1%

1:54 PM EST

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To: Essam Zaneldin who wrote (24955)	5/25/1999 2:03:00 PM
From: Eric Yang	Read Replies (3) of 213182

"Does this mean that those investors can sell their shares at current AAPL share price once the notes are converted?" Those investors can certainly sell their shares at the market price once they receive them. But the thing to keep in mind is that some of them sold their shares even BEFORE they've received them by shorting. With the convertible notes already called and just a few days to go before the conversion, there probably isn't much time value left in the notes so they should be trading pretty close to their intrinsic value. As such some notes holder may choose to convert even before the final due date next week. Some of the selling over the last week "may" have been related to the convertible notes. There is no way to be sure. The market as a whole has been choppy so I don't think we can blame it on any particular issue such as ARMHY or convertible notes. I think the important issue with regards to conversion of those notes is that once it is done it will benefits all of us. These notes holders had a trading advantage over the rest of us shareholders. They can enjoy the same upside profit from AAPL without being exposed to the same level of downside risk. Forcing the conversion at the earliest opportunity levels the playing field and is good for shareholders. As for ARMHY, I don't think it has had much impact on AAPL. I remember a number of times where ARMHY gain 7-9% in a single day while Apple ended the day in the red. The two doesn't seem to have much correlation in the short term. Apple currently owns 20 million shares in ARM or 6.67 million shares of ARMHY (ADS). So every $1 ARMHY changes Apple's shareholders' equity by $6.67 million. However the profit and loss isn't recorded until the equity is sold. So far Apple is way ahead of the game. Even with the recent drop in ARMHY Apple's share of ARM is still worth some $200 million with the cost being around $9 million I think. That's a lot of profit yet to be capitalized. ARM's market is growing at rapid rate. The stock should recover. Eric

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