Seagate Technology - Fundamentals Message Board

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Technology Stocks : Seagate Technology - Fundamentals

STX 287.64

-6.6%

Dec 12 9:30 AM EST

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To: Sam who wrote (1033)	7/19/1999 2:39:00 PM
From: Kevin Linder	Read Replies (2) of 1989

Sam - I agree with you in regards to the obvious mistakes made by Cramer's "Mystery Money Manager," however, there is one point that should not be ignored. SEG could be broken up for the various values of its parts. The 66 million VRTS shares at somewhere near $60 a share are a very attractive asset. It represents not only a nice chunk of stock of a quickly appreciating company - but also a majority share VRTS. Ths Sandisk and DRGN shares represent what could be very lucrative market niches and would provide many companies a nice toehold in a growing market. Then you have to through in the total amount of cash $1.6 billion and the HDD operations. I think that there has to be some thought right now at SEG headquarters that a potential corporate raider would find this attractive. I think that actually a company like IBM would find it most attractive - I doubt if regulatory approval would be granted for such a merger. However, IBM might be attracted enough to just try for the VRTS; Sandisk and Gadzooks stock... I do think that as QNTM and maybe MSFT try the tracking stock concept that SEG will be watching very carefully. If they are successful, then SEG may just attempt their own SEG Software spinoff. Remember that all of last year SEG was looking at doing a "carveout" of the SEG Software division. I'm sure the VRTS; DRGN and Gadzooks stock holding along with SEG software would make a nice $6 billion company. I also would not be surprised to see a debt offering by SEG. True they have adequate cash holdings of their own - but, a debt offering does something else too. It may prevent a competitor from issueing bonds. many insititutions limit their exposure to an industry and would much rather buy debt from a strong company rather than a weak competitor. A bond offering in the next three to six months might prevent WDC (as an example) from raising money in that fashion. If this CC is truely a "War Warning," then this would be an extremely logical move. I hadn't thought of it in these terms, but it does make sense. If SEG assumes they are operating efficiently and have a "lowest cost" product then an all out war would make sense. Kevin Linder

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