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.

Microcap & Penny Stocks : ATEC Group. Huge growth with PE of 12.5! -- Ignore unavailable to you. Want to Upgrade?

To: Sam Quentin who wrote (876)	11/5/1997 9:12:00 PM
From: Dollar Bill	Read Replies (4) \| Respond to of 1298

My perspective: In order to maximize shareholder value, which by the way, had better be ATEC's concern, the followong scenerio must be comtemplated before the consideration of a reverse split occurs. First, regardless of the the postion of the company, as an investor in the company, we must recgonize the fact that nearly all reverse splits result in a substanial decrease in post split valutaion. This is clearly backed up by historical evidence. In fact I have seen some estimates that nearly 95% of reverse splits suffer up to a 50% devalution post split. As all regular posters and lurkers to the thread are aware the primary reason for ATEC's consideration of the reverse split is to make the stock more attractive to instsitutional buyers. In fact most institutional buyers do have charters that may prevnt them from purchasing stock at less that 5.00/share value. Now then, since WE must recognize the fact that post split our holdings will most likely suffer a reduction in valuation (history again tells us this will happen), it is imperative that ATEC now do something to increase the current valuation of its' stock. Using a 5 for 1 reverse split, as proposed, will require that the valution PRESPLIT be at a minimum of 1 3/8 per share. This equates to a POST SPLIT valutaion of 6 7/8. Again, we must consider the devalution of the split. Using a conservative figure of 20% loss, the POST SPLIT value then would be 5 1/2 per share. IMHO this figure is extremely conservative. It does not account for any other external market forces, or other errors or mishaps by the company. Thus, prudence would dicate that PRESPLIT valuation should be approximately 1 17/32, thus providing a "cusion" for the eventual and predictable loss due to the revers split that will happen. This value would then equal a POST SPLIT value of 7.66 . Again assuming a modest 20% decrease as discussed above, the valution would then be 6 1/8 per share. What does this accomplish? First it allows the "cushion" necessary to make their stock attractive to instutional investors. Secondly, if in the event we have a market disturbance it allows for a greater "cusion" to absorb the hit, and stay above that magic $5.00 / share value. Folks, few if any institutiaonal buyers will consider this stock unless that 5.00 minimum is maintained. Their financial charters require that, and most important , the perception of ATEC's managent will be considered, be it a success or failure! Recently the company released its' last qtr report, and met or exceeded estimates, Yet because of the bungling of management, and the PR firm, NO price apprecation has occured, as it should have. Since perception is the driving force behind the valuation of all stocks, it is vital that ATEC now get its act in gear and seriously consider the above scenerio! Little or no fanfare was given to the last qtr. report, in fact to my knowledge, it wasn't even carried by Dow Jones. And, the total fiasco surrounding this proposed reverse split, could not have been handled more unprofessionally! It is time for ATEC to straighten up, concentrate on their shareholders, and for the next two weeks do nothing but examine, scrutinize and tell us the stockholders why we should support such an action. Hard numbers, not what ifs! If proposed acquisitions are needed, what is the cost? And how does it really impact the bottom line? If the perception by the shareholders is correct, it will be greeted by the "street" well. The value of the company will remain within a reasonable level that will benefit both stockholders and management. Failure to do this will result, in the stated reverse split explanations of the company, and be perceived by Wall Street as simply another hype, and the results may be disasterious. Essentially ATEC management, and The PR firm now control the destiny for this stock. Their actions will determine the outcome, not only of the shareholder value, but perhaps their own company as well! Thats my opinion. I would welcome you Mike Irving to comment on this, or anyone of ATEC's mangement. If you're a stockholder, and you understand the above principle, call the company and voice your concern!b Its your company, its your money! $BILL