Ron Himelfarb

Heelys Tanks On Dilution Concerns

Jim, I think the secondary is only part of the reason the stock will fall today. I happened to be listening to the cc after the earnings release, and the stock was falling well before they announced the secondary (midway through the cc).
Important to note that the evidence that the fad is fading is in the release....lower gross margins, as well as guidance which indicates that the third quarter of this year will be flat or lower than the third quarter of last year.. If you look at their sales these last three quarters, they have been in the 65-70M range, which seems to indicate that they have lost sales momentum.

The secondary happens to coincide with the end of the six month lockup following the IPO. Clearly, the insiders recognize it is overvalued ....and want out.