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To: Tony Viola who wrote (156732)1/24/2002 12:41:02 PM
From: Dave  Respond to of 186894
 
Tony,

God forbid GE dilute their shareholders....

GE....We bring the extra penny to life...

<gggggg>



To: Tony Viola who wrote (156732)1/24/2002 12:57:16 PM
From: Joe NYC  Read Replies (1) | Respond to of 186894
 
Tony,

isn't AMD's new debt instrument one that's convertible to common stock, which will result in dilution of the stock?

Yes, it is convertible at premium to current price. The interest rate in the meantime is 4.5%, lower than 11% they called and probably on par with the subsidised rates of debt that is maturing. There will be immediate dilution, so there is a trade-off.

Joe

<edit> So are you modifying your theory that debt is bad, and only weak companies have debt to a new theory that convertible debt is bad? </edit>



To: Tony Viola who wrote (156732)1/24/2002 1:15:53 PM
From: The Duke of URLĀ©  Respond to of 186894
 
" When's the last time any of those other companies you mention diluted their stock this way?"

The milestones in Gerstner's tenure at IBM could be as follows:

1. Write off 8 Billion upon being hired.
2. Borrow at 8%.
3. Earn 13% on invested capital.
4. Use the loan proceeds to buy back outstanding stock.
5. Earnings per share constantly increase.
6. Lather, Rinse, Repeat.

This of course is the 180 degree opposite of issuing convertible bonds.