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To: Susan Saline who wrote (18383)	1/10/1999 7:30:00 PM
From: tom pope	Read Replies (1) \| Respond to of 53068

SME After Sue posted her interest in SME, I decided to take a look at it. This is a tough one. The events of the past month – 12/15 interest payment missed, CEO resignation, new Citicorp revolving credit to take out the existing Chase syndicate - seem to pretty clearly signal the failure of the strategy to move from the catalog showroom format to general in-store merchandising with an emphasis on jewelry. The last “holiday sales update” gives very little room for optimism in spite of the increase in gross margins because the increase was negated by the decline in comp store sales. The stock's rise on Friday was driven by the news of the Citicorp financing. Today the Tennessean ( SME is based in Tennessee) reported that a principal in the workout firm of Jay Alix and Associates was to take over as interim CEO. This has not been confirmed by the company. I have to think that all these events are related – Citicorp agreed to the financing only on condition that the former CEO resign and that an outside workout specialist be brought in. I'm not certain about the legalities, but I also think that the Citicorp financing rules out the possibility of Chapter XI, which would be the death knell for equity investors. (In other words, I'm saying Citicorp probably wouldn't be able to turn its financing into Debtor in Possession financing , at the expense of all other creditors and equity stakeholders.) I still have friends in the business in New York and will try a few phone calls tomorrow to see if they know any background to this particular deal, how Jay Alix and Associates operates, whether it has special ties to Citicorp, and whether the financing rules out a Chapter XI filing. Like I told Sue, a very interesting situation. I don't know what SME is worth. It might be zero, or it might be worth 5 or even a lot higher. But it certainly ain't worth 7/8. My guess is that the stock will rise short term if the news of the appointment of the workout artist materializes.

To: Susan Saline who wrote (18383)	1/10/1999 7:32:00 PM
From: Ron McKinnon	Read Replies (1) \| Respond to of 53068

Sue, maybe I confused you what you posted here is correct all I, and Dan, were saying is that it might not be a good idea to use sell stops at all in these fast moving internets the market makers are abusing market orders, which a sell stop order becomes when triggered, to the extreme example, lets say the bid is 34, and a market maker gets a market sell order they may well fill your order at 34 many times , or maybe at 33, or 32 or just about anywhere they want to fill it so it is better to watch your position real time and simply put in a limit sell order the second you want out normally I'd say put in a sell stop if you are going away from the computer but these move so fast i would not want to be in one for the time it takes to go to the bathroom for any "normal" stocks what you posted here is perfect