I have had stock in other companies that have had secondary offerings. To really understand you have to remember that a stock's price doesn't always represent a company's true worth. On one hand you have a company's true worth, the assets (capital, equipment, employees, etc.) minus the liabilities of the company. On the other hand you have what people are willing to pay for a company's stock. These two are NOT the same. Now, a secondary offering will add more shares to the overall total of available shares. THIS WILL DILUTE THE STOCK PRICE SHORT TERM (though not necessarily severely). But, what we give up in short term stock price the company gains in long term ASSETS! The money that is made by RDWR will be invested in additional R&D, sales force, perhaps even acquisitions. Think about it this way, if RDWR sent you a letter asking, "Would you allow us to lower the stock price short term so that we can increase our assets? We promise to use your money to increase shareholder value so you end up getting it back." I would say "Sure go ahead.� because I am a long-term investor. Short-term traders will not like this because they are unwilling to wait around for the benefits. This is why it is generally viewed unfavorably by many. But the truth is there is not much difference between this and a split. More shares exist afterwards. The per share price goes lower, which attracts bargain hunters. Volatility decreases. But, in this case, the company gets a piece of the pie too! BUY, HOLD, GET RICH!
Hypothetically , If RDWR were to make let's say a $.04 per share profit this qtr. Now with the additional shares they are going to issue, how would there profit look (per share) if those additional shares were already issued? it would be about $.025 approx instead, correct? If you look at it this way it doesn't seem all that bad.