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Technology Stocks : Applied Magnetics Corp -- Ignore unavailable to you. Want to Upgrade?

To: Bald Eagle who wrote (11400)	2/8/1998 7:39:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 12298

Wiseowl, issuing more shares does not necessarily have to have a dilutive effect. If these shares, replace debt financing at high interest rates for instance, it could actually improve the EPS. It all depends on the company's return on assets, if this return can be kept consistently above the prevailing interest rates, than debt (but not too much) is good. If however, the return on assets is consistently under what the prevailing interest rates are, the company will go broke one way or another. In the specific case of APM, if shares are issued around the current prices (which is pretty close to book value), it means that the company see an urgent need to fill its coffers for bad times ahead. If the stock is issued above 25 or more (double the book value) that will be beneficial for the current stock holders since the book value will increase. I would assume that as a matter of an ongoing business, APM sees its way to earn returns above the cost of money, or otherwise, they might as well close the doors. Zeev