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

To: NHP who wrote (26975)	11/17/2004 6:06:54 PM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 60323

NHP, a convertible offering that is privately placed is a strategy often used by companies to MINIMIZE the impact on regular shareholders. If they just issue more stock, then you have instant earnings per share dilution. If they borrow in the form of bonds, then they would pay close to double the rate of interest compared with the convertible. As to the private placement, it avoids time and expense of formal registration, required when securities of any sort are sold to the public. And finally, a convertible offering is reported initially as an addition to long term debt. When the shares are exchanged for common stock, the debt goes off the books and additional equity is automatically created, so the debt to equity ratio improves. Warren Buffett often arranges this type of investment, as he did over the years with companies such as Champion International, US Air, etc. Art