I agree with the Fica Dude posts on Friday, except for his/her interpretation of the Scion accounting. If you look at Read Rite�s chart, almost everyone who�s bought and/or sold this stock since August 2000 has done so at a price above $4.00. This means that virtually all of the poor people conned into selling Friday, sold at a loss. The massive volume, in the absence of any appreciable price move during the day, says the pre-open, low volume price activity was contrived. Remember, almost the entire downward price move took place pre-open via the buying and selling of just 35,000 shares (see Fica Dude post). Someone was sitting back and buying all the shares offered preventing a massive price collapse during the day. No matter how many shares were offered for sale, someone stepped up to buy. If there was a huge difference between the number of shares being offered for sale and the number of shares trying to be purchased, the stock price would have dropped much more (during regular trading hours when the volume was extraordinary).
I understand that many "funds" cannot own a stock below $5/share, however, I�m not sure how quickly they must dispose of their positions. Some may be subject to program selling. Still, the funds involved would have had to buy all of their shares since November 2, 2001 (the last time the stock went above $5). Consequently, I don�t buy the "fund selling" explanation for Friday. Naturally, if Friday was mostly forced selling into the pockets of some other institution, this would be a huge positive and point to a massive fleecing of the fund industry by some institution. Force the funds to sell at bargain basement prices contrived by an institution pre-open? Wow!
As regards Scion accounting: Rdrt is the 80% owner, but is only financing a minority portion of total expenses. However, rdrt is only expensing what it pays Scion. Therefore, mechanically, Rdrt absorbs all Scion expenses in consolidation and then backs out most of these Scion expenses. What�s left in rdrt eps is the cash cost of the Scion venture to Rdrt. Still a pretty good deal as Rdrt owns 80% of a company being developed at the expense of Tyco.
It is also very curious how the company pre-announced 2nd Q information before they�re even scheduled to discuss the 1st Q. The last thing this revelation means to me is that management wants to keep me informed on a timely basis. No, something else was behind this wonderful feedback.