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

To: StockDung who wrote (1069)	3/21/1999 7:26:00 PM
From: Francois Goelo	Read Replies (1) \| Respond to of 1591

Copy of your post plus a number of relevant questions just e-mailed. eom

To: StockDung who wrote (1069)	3/22/1999 12:37:00 AM
From: Eric Fader	Read Replies (1) \| Respond to of 1591

<That is a lot of dilution.> YOU BETCHA!! While Francois's analysis, if correct, certainly bodes well for SFLK for the long term, I believe we have now identified the reason for the stock price dropping from 8 to below 4. Four million new shares is an awful lot to absorb into the market. Even if some of those shares are restricted and have not officially hit the float, and/or if only a few of them have been sold, just by adding up the volumes for the past couple of months the problem becomes apparent. The liquidity in SFLK, especially recently, has not been sufficient to absorb millions of new shares. The other potential problem: since we know nothing about these stock issuances, we can't rule out that there was a convertible preferred or debenture issue with a floating minimum conversion price. That would explain the very significant dilution, as well as the dropping stock price, as shady convertible holders often short the stock to obtain a more favorable conversion price. I agree with Floyd that this company owes its shareholders some answers RIGHT NOW! BTW anyone who is unfamiliar with convertible preferred and its ilk (a/k/a "exploding preferred," "toxic convertibles," "death spirals," etc.) needs to do some remedial reading on the subject immediately. Do a full-text search for some of those terms and you'll find some well-written material right here on SI.