Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : PMC-Sierra (PMCS) -- Ignore unavailable to you. Want to Upgrade?

To: Kevin who wrote (3459)	5/2/2000 7:34:00 PM
From: Toby Zidle	Respond to of 3818

Kevin, I have no special knowledge of how these 700 million shares will be used. The essence of the question I'd raised was to solicit suggestions. But there are numerous possibilities: 1) Employee Stock Options - I hope that's not the whole story. Would be very dilutive if that were it. (Of course, I do expect that some of the new shares will go in that direction, but not disproportionately so.) 2) Stock Splits - Neutral, except that increased number of shares adds "liquidity" which makes PMCS more attractive to institutional buyers. In total, somewhat positive if it makes PMCS more of a 'household name' to tech investors and major analysts. 3) Purchase of Other Companies via Stock Exchange - Could be either dilutive or accretive, depending on the exchange ratio. Can be a cheap way to make quality acquisitions or a dispersal of our assets depending on the negotiating astuteness of the PMCS executive team. 4) Sell the Stock on Open Market to fund Working Capital needs or R&D developments - A very dilutive squandering of our equity just to get operating cash (but isn't this an overly negative view if PMCS is growing as fast as others here have indicated?). In my mind, it's a similar dilution for R&D funding unless the outcome is some world-class chip that thrusts PMCS into a killer category by itself. R&D outcomes, by their nature, are never certain. They are risky. Thus, to quadruple your shares for this risk would, in my view, be irresponsible leadership. 5) Other - I don't presume that I have an exhaustive list above. Someone else will come up with alternatives I haven't contemplated. I do hope so anyway. As I said, Kevin, I have no special information about the need for shares. It hasn't been a hot issue here either. I'd expect a combination of uses: additional stock to back employee option plans, a future (2-for-1[?]) stock split, and a bunch reserved for acquisition. I hope little or none of the new stock is used to fund routine operations or research.