Disk Drive Sector Discussion Forum Message Board

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Technology Stocks : Disk Drive Sector Discussion Forum

WDC 157.11

-5.4%

Nov 13 3:59 PM EST

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To: seminole who wrote (8195)	3/30/2000 2:44:00 PM
From: Gus	Read Replies (2) of 9256

Was there really any doubt? The deal is too imbalanced. It is way too generous to Veritas and Silver Lake/Texas Pacific/Seagate Management Group and that unwarranted generosity clearly comes at the expense of SEG shareholders. My sense is that they crossed a line of propriety with the net $1.2 billion bid for the $6.8 billion disk drive business which is clearly poised for a major breakaway cycle with its 15000 rpm enterprise drive and newly competitive areal density programs. SEG on its own has a legitimate shot at a PSR of around 4, or a market cap of at least $25 billion, once its cyclical peak earnings power become more visible. 805 institutions own about 77% of SEG and there was significant net institutional buying (7.62M) in the last quarter reflecting the emerging view that the sector was starting to come out of its multi-year slump. I don't see how SEG can sufficiently sweeten the deal for these institutions. I dare anyone to try.

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