To: Cathi Wierzbicki who wrote (15952 ) 11/11/1999 1:53:00 PM From: Zeev Hed Read Replies (1) | Respond to
Cathi, I think it is a combination of factors. First, as John noted, the order is not in the class of "material", as important as it might be. Second, the fact that it is not sold directly to the OEM but through an intermediary, means that the profit margins on this order would be below the standard expected margins. Third, there is a lot of supply of stock here at around $6 (remember that that was the lower part of the range in the first six months this year) and until this supply is taken out, a drastic move is bound. Fourth, unless other orders come in that will exploit the current capacity, cash will still need to be raised, and unless this cash is at better prices than the recent financing, dilution could still be a problem. Fifth, the market may realize that profitability will not be there for at least another four quarters (when production rates reach double current burn rates). Sixth, some investors that bought between $8 and $11 earlier this year may be using this rally to take some short term capital losses.
