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Technology Stocks : The New QLogic (ANCR) -- Ignore unavailable to you. Want to Upgrade?

To: George Dawson who wrote (17943)	9/4/1998 7:58:00 AM
From: w2j2	Read Replies (1) \| Respond to of 29386

George, This "Death Spiral" comment really makes my day! :-( wj But the situation I describe below isn't very normal. Looking at the S-3/a, it appears that the convertible had a principle value of $11 M, which happens to be about the market cap now. A ratio of about 100%. It was 16% back when they did the deal, but the stock price has since fallen a lot. In the case of ANCR, the conversion price doesn't start to float till next year, so it appears likely that all of this overhang of imminent selling is still waiting. The average convertible deal is 10% of market cap, and this doesn't kill the stock price. A ratio of 16% is pretty bad. A 100% ratio, though is hugely awful. Looks like this is a perfect example of a discounted convertible that has gone into a 'death spiral'. The more the stock falls, the more the upcoming dilution, and there are no limits on this.