Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : American International Industries Inc. OTC BB Symbol EDII -- Ignore unavailable to you. Want to Upgrade?

To: ColleenB who wrote (4525)	1/13/1999 9:05:00 AM
From: Don Metzger	Read Replies (1) \| Respond to of 4814

Colleen:You are wondering what Danny is thinking about?Did you consider the 1.9 million in cash this company is holding? Don

To: ColleenB who wrote (4525)	1/13/1999 9:31:00 AM
From: jmt	Read Replies (1) \| Respond to of 4814

Colleen: The number of shares issued is always used in any per share calculations (not to complicate with fully dilluted calculations which may include in-the-money options and other stock derivatives). The reason is the common shareholders are the owners of the company. And the only shares common shareholders can own are those which are issued. So if a company has 1M shares outstanding, and earns $1M, each shareholder is entitled to 1 dollar of these earning (cash flows) for each share owned. Now if the company needs money and issues 2M more shares, you only get 33 cents of earnings. Therefore the company being purchased must be able to contribute earnings of $2M to make the acquisition "non-dillutive", or "acretive". When the company being purchases for 2M shares is loosing money, your share as a common shareholder is reduced twice, once by the additional shares issues (denominator), and again by the reduction in earning caused by that companies losses (numerator). Thats why no EDII press releases say the acquisitions are accretive, which you see most companies announcing when they acquire other companies. And one of the ways to realize accretive acquisitions is to by similar business, where you can squeeze out duplicate costs through "synergies". But by buying companies in completely different industries, no significant savings will be realized. If an investor wants to diversify his portfolio, he/she can buy companies that specialize in each industry. In EDII, the company is diversifying for you, but by purchasing companies which are losing money in industries which are not at all integrated. Its appears more like building an empire than building a profitable company. jmt