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

To: Greg Hull who wrote (18763)	10/23/1998 12:38:00 AM
From: George Dawson	Read Replies (2) \| Respond to of 29386

Greg, I took a slightly different approach. If we know that the cumulative rate of conversion is 15% per month then you can do the following: 1. Construct a table of the 6 preferred holders from Table 1 of the S-3 and calculate the percentage increases for each of the monthly conversion periods (4 so far). Figuring a maximum conversion, per month gets you to a total of 5.5 million shares. Multiplying this figure by about $1.30 (the original stated conversion price form the S-3) you get about $7.2M. As far as know this approximates the total conversion to date and suggests that the conversion is proceeding at a maximal rate. 2. Assuming the total common stock is 17M shares and limiting the 5 major holders to the 5% figure means that - if they chose to they could each be holding a maximum of 850,000 shares. That means if they are holding the shares (which is not known) they could have sold a total of 1,279,356 shares. The actual rate per month is about 520,000 shares added at the maximum conversion. In the worse case scenario, assuming they sell everything except what is needed to cover the current short position of 1,697,322 shares they could have sold a maximum of 3,832,678 shares or 958,169 shares/month (this would include selling the initial amount before the conversion). I think this model accounts for the current conversion and suggests that the preferred owners are actually taking advantage of the incentive to sell. For the arguments about which way the price is trending - it explains the lack of upward price movement as being due in part to the potentially huge amount of selling pressure that can be generated. It easily explains how there can be large volume spikes with no significant change in the share price and how the average volume per day can essentially double with no significant change in the share price. All in my opinion - obviously a lot of guesswork is involved. Let me know what you think. George D.

To: Greg Hull who wrote (18763)	10/23/1998 2:13:00 AM
From: George Dawson	Respond to of 29386

Greg, Your calculations about conversion price also say a lot about the 9/25 peak. The columns are date, price, and volumes(00s): 09/30/98 1.719 3232 09/29/98 1.938 4356 09/28/98 2.000 6008 09/25/98 2.125 23875 09/24/98 1.469 2486 09/23/98 1.406 2496 09/22/98 1.531 3391 09/21/98 1.563 2214