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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (61331)6/3/1999 1:14:00 PM
From: GuinnessGuy  Read Replies (1) of 132070
 
Mike,

"Warrants are fine, but warrants at a discount price contingent upon the receipt of business is weird."

Which part is weird? Certainly not the discount as Sun could just go to the market and accumulate shares. So you mean that the contingency on business is weird? By weird, do you mean illogical, or do you mean unusual? I guess that unless we know how much Sun is paying for the switches(perhaps a small premium/discount?) we can't know if this is a good deal or not. That notwithstanding, I see this as a great way for Ancor to (1) get a little funding, (2) encourage Sun to order more switches and thus get more revenue(and thus market share). At this stage of the cycle Ancor and Brocade investors will be much more interested in seeing revenues than earnings, IMO. And the dilution caused by the additional 1.5 million shares will cause about a 5% dilution in EPS(assuming that there were no product price concessions). And, of course, while you are losing money you actually dilute losses. -g-

Craig
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