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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Brendan W who wrote (11796)	9/1/1998 12:09:00 AM
From: Rick	Respond to of 14631

Haven't been here in a while but an alarm went off at $4. Only read back a few days but, just an opinion here you folks might want to look a little deeper into the financing of ifmx. Especially the floorless preferred convertables. Just a guess but the relentless pounding to the bid side would (again just an opinion) be preselling of the preferred holders conversion. The lower the price the more shares get converted. This is a huge financing trap that many cash strapped companies have gotten themselves into lately. Financiers are taking their money right out of your pocket on the pretense of being a white knight with financing. Markets down yes, but did ifmx deserve $3.5? Just an opinion but don't think it's the bottom.

To: Brendan W who wrote (11796)	9/1/1998 12:23:00 PM
From: Robert Graham	Respond to of 14631

Look more closely at the 10-Q. It will reveal to you the warrants, the convertible preferred, and how the financing company that has been financing the cash flow of Informix has been converting to and selling common stock. This has been an ongoing event for several quarters now and has even been documented in the press. Go to the SEC web site, pull up the 10-Q on Informix from the Edgar database, and search on "preferred" or "convertible", and look particularly at "warants". It is as simple as this. The warrants are converted into convertible preferred which are then converted into common and sold by the financing company. The convertible preferred in this process will not be retained for any significant length of time because once the warrant is converted the share holder is looking to convert to common and sell for a profit and not tie up monies in the process. The last such transaction was in June of this year. But a preferred stock dividend was paid which means there was convertible preferred outstanding at the time of the 10-Q along with warrants. I will leave it up to you to calculate how many shares of stock is left to be generated through convertible preferred and warrants. I am sure there are people here interested in such information that would benefit from your contribution. As far as break even goes, do you think a company like Informix does not need alternate sources of financing when it is only booking a profit that is a few cents above break even? Think carefully about this. Think cash flow and how most companies go bankrupt not due to net worth but a lack of cash flow to pay the bills. Think about the cycles of business and the need for a reserve to finance operations in the form of cash and short term credit. Think about their turnaround situation and the increasing demands for money this will make on their financial picture just to stay alive not even considering their goal to actually grow their revenue base to where it once was. The answers will then become very obvious to you. Financially speaking, Informix is far from being out of the woods yet. As far as there being no debt, look again at the balance sheet. There is 155M alone from advances from financial institutions. If this company was credit worthy, they would have LT debt. Instead these "advances" will have to suffice for now. And until they can accrue LT debt, their turnaround plans will have to go on hold and survival will continue to be the issue. Bob Graham