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

To: Greg Hull who wrote (17961)	9/8/1998 12:32:00 AM
From: George Dawson	Read Replies (2) \| Respond to of 29386

Greg, Thanks for hanging in with the S-3. Let me respond to the points you raised: 1. My initial concern was with the arithmetic of Table. 1. If I do the arithmetic using the conversion factors, current preferred shares, current common shares, and the respective conversion factors I get close to the 25M shares outstanding. If I add the totals in the table or figure based on the original numbers of preferred stock I do not. I conclude that some of the stock was converted at a higher price and we don't know those numbers. I did not pay attention to the 5% clause in footnote 4 regarding 5% ownership, but this is potentially offset by no limit on the shares issuable if necessary. 2. My limited understanding of shorting is that you have to cover at some point in order to make a profit. The shorted shares are initially borrowed and your profit - assuming that price has fallen, is the difference between the price of the borrowed shares minus the price of the shares bought to cover. I would think you can cover and convert at the same time. Like most of us I would think they also have an interest in averaging down if they have shares they accumulated at higher prices. 3. There is also some confusion about the ability of the preferred stock holders ability to short the stock. In a confusing earlier document I found this excerpt (from Form 8-K filed on 2/23/98): "6.11 Limitations on Shorting. Subscribers hereby covenants and ----------------------- agrees that (i) during the thirty (30) trading days following the Last Closing Date, and (ii) during the five (5) consecutive Wednesdays immediately preceding the date that is one (1) year after the date of the Last Closing Date, Subscriber will not enter into a short sale within the meaning of Rule 3b-3 of the Exchange Act with respect to the Common Stock of the Company; provided, however, that nothing herein shall limit the rights of a holder of Series B Preferred Stock to sell shares of Common Stock received or to be received upon conversion of Series B Preferred Stock provided that the Notice of Conversion (as defined in the Certificate of Designation) is delivered by the end of the first business day following such sale." As far as I can determine the Last Closing Date was February 19, 1998, meaning that they can short the stock. Reading these SEC reports is a full time job. I think they could eliminate the 200 word sentences and give you all the facts on a 3 x 5 card. George D.