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To: Ludo who wrote (9459)	3/14/1998 1:33:00 PM
From: J R KARY	Respond to of 213176

Ludo AAPL's conv. bonds at 6% did not appear to be "income grade" From my "12/97 remember" but the converts can be cnv'd at any price other than the stated ($29 by 2002 ?) . The holders are savy investors as is Dr. Gil who saved AAPL the going rate for a high risk placement of this sort (5% ?) . This saving I suspect was the basis for old board's approving the $5 mln loan and his banner bonus . I tried to purchase some of the bonds and found it was virtually impossible so I suspect Dr Gil had other ways in mind for the bonds to be traded if not converted . From EDGAR filings it "appears" some of the conversion has occurred but no conversion price is listed . The converted shares were then placed in "trust" with many investment bankers . AAPL was (12/97) selling around $14/shr and Power's dilution at $14.25/shr was looming (occurred on 1/19/98 at $19 +) and it just didn't add up . A possibility was (12/97) these shares would be placed at "option" for a very profitable ride back up (beyond $29) and to be sold later in block with the remaining (unconverted) bonds to a "interested investor". It was speculation then , was posted here as that , but maybe Dr. Gil had a developed a method where a buyer could position himself without having to disclose prematurely . Skipping the speculation , these savy bondholders know their conversion will be "mildly" dilutive , actually help the bottom line by relieving interest charges, and would probably cause shares to appreciate . Research the Sept. and Dec. EDGARS for more accurate detail. Jim K.

To: Ludo who wrote (9459)	3/14/1998 1:38:00 PM
From: Phillip C. Lee	Respond to of 213176

Ludo, You have got a good hedging method for bond/stock conversion and I believe your $32/share is about the right amount but still exist risks in the long run. However, those bonds were majorly held in 401k/IRA bonds mutual funds, where the money managers usually play safe for their annual bonus. It won't be necessary for them to take any risks to please clients since those funds are steadily injected with big chunk of money from 401k holders. Besides, if any individuals who hold bonds, they are supposed to be conservative group and hence usually don't bother and are not interested in up/down of the stock. Phil