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Technology Stocks : Seagate Technology - Fundamentals
STX 304.01+6.9%Jan 9 9:30 AM EST
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To: Struggling Investor who wrote (1701)4/7/2000 6:24:00 PM
From: Mark Madden  Read Replies (2) of 1989
 
Struggling -

Thank you for the efforts you are making to bring out facts on this proposed SEG deal.

This is the fourth buyout I have been involved in during the past decade. I still feel inexperienced because each occurred differently. The SEG offer is the first that did not try to tender shares to gain voting shares. The tender offers have usually been about 50% above the market price to make most of the shareholders willing to sell. Here are my completely unqualified opinions.

1. I am on the side that believes SEG operations is worth up to 10 billion dollars (my dollars sign key just stopped working). John Dean of Soloman Smith Barney recently estimated the operations at 53 dollars per share. I also think time is on the side of higher evaluations as the industry recovers.

2. I do not think the SEG management is going to be able to convince the institutional ownership to go along with this deal. The institutions would not own the stock if they didn't feel it was worth more than the market price when it was in the 70's. The 77% institutional ownership will control the vote.

3. Steve Luczo is in an awkward position. With 12 lawsuits pending, this next conference call will be under a microscope. If he misleads the public in any way, his statements will fuel the success of these suits. I would not be surprised if the conference call was cancelled.

4. I would not be surprised to see several large institutions band together and quietly negotiate the resignation of the Board of Directors (BOD). There can be no negotiated sale of SEG when only the insiders know the facts. The institutional ownership will need people they trust to determine the fair value of the stock. They will recommend the stockholder elect trustworthy people to the board.

5. If a new BOD is elected, they will recommend the stockholders vote against the deal as proposed. Maybe they can get out of any penalties because the BOD should not have the authority to commit to shareholder decisions. The lawsuits will be dropped saving SEG shareholders millions in legal fees.

6. I do not think the SEC will take any action until there is a vote of the shareholders. They can not take action against the will of the shareholders. However, they will take action if the shareholders are mislead in any way.

Again, these opinions of mine are not qualified from experience or knowledge in these matters. I just believe there are controls that protect us from this kind of robbery.

Regards,
Mark
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