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Technology Stocks : Citrix Systems (CTXS) -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (6672)	6/11/1999 2:22:00 PM
From: Biomaven	Read Replies (2) \| Respond to of 9068

CTC, The reason is that if the price of the stock is below the conversion price trigger then the extra shares that would be counted by dilution won't appear on a fully diluted basis. They will appear only if the price of the stock is above the trigger. This was the correct way to treat the convertible debentures under the old APB 15. However, under the new standard, FAS 128, the relationship between the conversion price and the stock price is irrelevant for convertible preferred and debentures. (Of course it is still very relevant for options and warrants). Instead they are treated as described in my previous post - you always include them when their effect is dilutive, which is when the interest payments exceed the basic earnings attributable to the shares you would get if converted. Peter

To: Chuzzlewit who wrote (6672)	6/11/1999 3:30:00 PM
From: MikeM54321	Read Replies (1) \| Respond to of 9068

"Now this would be alright, because in effect the company would have simply made the decision to leverage itself -- issue debt and use the proceeds to buy stock. The sticking point is the fact that they used convertible debt to accomplish the leverage. This begins to smack of financial engineering." CTC, Normally I would agree with you completely. But I've been following CTXS for at least three years now. And I have to say, they tend to, "fall into it." (Please no flames from diehard CTXS fans. It's just an opinion). It's almost like the company continually shoots from the hip. On one hand it's frustrating, but on the other, the thin-client paradigm opens up new markets that are very hard to predict. I do have to say, when a market opens up, CTXS seems to pounce on it. I started to mention this previously with the convertible-->share buyback post, but decided it wasn't pertinent at that time. To be honest, I think they did the debt offering, not knowing fully what they were going to do with the large amount of cash generated. Well conincidently the stock price started to hang up and I think they just saw an opportunity and grabbed it. I really think this is all there is too it. I know it doesn't seem possible with a sum as large as $300 million, but as I've watched CTXS develop over the years, it seems to be how they operate. Another positive way to look at them is, they are very quick on their feet<G>. MikeM(From Florida) PS Thanks to both you and Peter for your informative posts.