To: Stephen L. Smith who wrote (3587 ) 12/16/1997 8:59:00 AM From: David Pawlak Respond to
Stephen- A secondary offering is not necessarily a bad thing. First of all though, let me say that I don't beleive they would do a secondary unless the price was in the teens at the very least. Par's the biggest stock holder and would be hurt the most by excessive, unwarranted dillution that would be caused by a secondary at these levels. Furthermore, if there's going to be a secondary, there'll be a good reason for it, like an explosion in demand for the Gigamux, or even a successful launch of the Gigamux. The Gigamux is their most expensive product to produce as well as it's highest gross margin product... So if the product takes off like I expect it to, then a secondary will be likely somewhere down the road IMO if all goes well. But, consider where the price of the stock will be if they sign, say, 3 major customers in the near term (my guess would be a price in the teens - 20's). Seems impossible, I know, but I can direct you to several companies that don't even have any substantial sales or product ready for the market but talk about DWDM and are valued at very high levels. Sales and earnings that would be generated from 3 major customers is mind boggling and hard to conceive, but even harder to conceive is the price of where this stock is now if you consider how likely it is. So, a secondary, IMO, won't happen unless there is a need and the price is much more favorable, hence not much dilution.
