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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: pompsander who wrote (26307)	7/5/2004 8:40:20 AM
From: Dave	Read Replies (1) \| Respond to of 60323

Pompsander: A secondary offering could reduce book value per share only in one circumstance. When a stock is selling below it's book value and the company issues more shares. Think about it this way: You have a company who has one share outstanding and shareholder equity of $20. It is currently trading for $10. It's book value per share is $20. (20/1) Now they issue one additional share. Book value is now $15 ([20+10}/2) On the other hand, when a company sells for "multiples" of its book value, secondary offerings alway increase BVPS. For example: Assume company is trading for $100 and the company has $20 in Shareholders' Equity. (One share outstanding, too!) Company issues one additional share (2 shares now) Book value per share is: ([20+100]/2) = $60 Make sense? Now of course, my examples exclude stock options, but you should get the picture.