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Technology Stocks : Zitel-ZITL What's Happening -- Ignore unavailable to you. Want to Upgrade?

To: E Rosen who wrote (16625)	7/16/1998 2:04:00 PM
From: Mark L.	Respond to of 18263

"I was surprised that investors ponied up for the latest convertible debenture, and that the Cayman folks have not fully converted the first one..." Why were you surprised? As long as there is a liquid market for Zitel stock, purchasers of a floorless convertible will be just fine. What I don't think many of the shorts here realize is that this process can go on for a very long time. Zitel gets 10 mil, burns 8, makes an interesting acquisition for 2, Zitel gets another 10, burns 8, makes another interesting acquisition for 2, etc. You don't get to bankruptcy until a liquid market for the stock evaporates. Only then is the game up. Please note that at no point does Zitel have to make money. All they have to do is have an interesting enough business that it attracts the attention of investors. The risk for the convertible holders is not that Zitel won't do well; it's that the stock might encounter liquidity problems, from something like a de-listing, for instance. Dilution, yes. Bankruptcy, no. You don't have to come up with conspiracy theories. The convertibles are an excellent investment--in my opinion, a better risk/reward situation than being short the stock. Unfortunately I live in the U.S.