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Technology Stocks : XYBR - Xybernaut -- Ignore unavailable to you. Want to Upgrade?

To: Night Writer who wrote (1845)	1/9/1999 2:15:00 AM
From: Dave Shoe	Read Replies (1) \| Respond to of 6847

Warrants for Xybernaut expire on July 19, 1999. At that time, we can give one warrant and nine of our own dollars to Xybernaut and they will give us one share of regular Xybernaut stock. Actually, nine dollars was the original dollar difference ('strike price', I think it's called). It has since been adjusted from $9.00 to something like $7.75 through some normal compensation mechanism. It might adjust again. This means, warrants have a value which is $7.75 or so less than the regular stock. I own warrants because I'm confident the regular Xybernaut stock will be well into double digits by the time mid-July rolls around. (Wanna buy some warrants from me?) If Xybernaut stock is worth $12.75 at that time, then the warrants are worth $5.00. This is around 3X profit (from today's price) for either. If the stock is only worth $7.75 or less come July 19, the warrants are worthless. If, at ant time, the stock hits more than, say, maybe $30.00 for a few days, they can call the warrants in early. This is good. If the stock is worth $20.00, the warrants are worth, let's see, ummm, $12.25. Recognize, this is about break even value (based on my humble and inexperienced understanding, and uncanny ability to screw up the math) between warrants and regular stock because, let's face it, next time the stock passes five, you're gonna get margined out to the gills, right? You can't margin the warrants, as far as I can tell. If the stock is worth more than $20 in July, warrants were the better bet. If the stock is less, then the warrants were a bad idea. Xybernaut has 20,000,000 shares outstanding/14,000,000 in the float. I estimate that sales this year will be about $100,000,000. More, if things go well. I'm guessing that profits will be $10,000,000. More is likely (IMO), assuming they don't go bankrupt or something (hey, for all I know the dang wearables are pink). At any rate, this comes out to $0.50 eps for 1999. With a PE of 35, the stock might be $17.50 by years end. Caution, I'm new at working these numbers. I hope anyone who knows better will poke holes in them and state their own, more probable, values. I'd like to hear them. Based on my numbers, worst case suggests that it's best to own the stock. I'm hoping for better performance, so I still think the warrants are a better bet (but save me a curb spot anyway). Will the warrants permanently tank in a couple days or weeks if bad news, or no news, is forthcoming? I don't think so. There is actually a lot of time, and a lot that will happen between now and w-day. If the warrants drop significantly, I'll probably sell my dog to the Burlington Coat Factory just to scarf up on a few more. Shoe.