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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Anthony@Pacific who wrote (1777)	9/14/1998 2:40:00 PM
From: majormember	Read Replies (1) \| Respond to of 2506

holding TERA Sept 7 1/2 puts, am I o.k. by Fri??..TIA..Skane

To: Anthony@Pacific who wrote (1777)	9/14/1998 5:46:00 PM
From: Q.	Read Replies (1) \| Respond to of 2506

TERA has problems to be sure, probably worse then CYCH, and I'm short, and it's probably as good a short as any I know of, and I'm satisfied that they closed at a new 52 week low today, ... but ... regardless of anybody's rumor, the financial statements are simply not consistent with an expectation of "BK this morning." BK in February maybe, but not "this morning". They had $9 M cash on 6/30, and their cash burn was $10 M in the previous 6 mos., so they should be okay right now, and able to pay their bills into December. If they stiff their vendors and lay off employees they can last a few months longer. That's my analysis of their liquidity. The co.'s analysis of its liquidity, in its latest 10k, is even less worrisome than mine. See excerpt below. Anyway, the offshore fund would not have done its private placement of convertibles 2 1/2 months ago if they thought BK was likely before they could flip and get their money out, which takes generally more than 2 1/2 months. You mention their underwriter. Thanks. I hadn't noticed it before, but this really is interesting ... MarketGuide shows:IPO 9/95,1,700,000 shares @ $12 by H.J. Meyers & Co., Inc. Here's the background of HJMC that I dug up: HJMC was accused of penny-stock securities fraud securities.stanford.edu and oag.state.ny.us and this is a big risk factor for the stock to be sure. Here's the 10Q excerpt re. liquidity: Although the Company believes its current cash resources, together with funds anticipated from future sales of MTA systems and the Series B Option, to be sufficient to continue anticipated levels of business operations through 1998 and the first half of 1999, the Company may require further additional working capital if sales of the MTA system, including additional deliveries to SDSC, are substantially delayed.