Chi Tao. Why so confident? You probably wouldn't have asked that question about three months ago. And although it disappointed last quarter, citing problems in the disk drive side of the market, it remained profitable while Seagate and Western Digital posted losses. In fact, Adaptec has had many successive profitable years, indicating good management and good products. From what I have seen, it has a fine reputation and name recognition in a niche of the market. I am no expert, but it seems to be quite efficient at what it does, with only 3,500 employees producing gross revenues of nearly $1 billion in the year ending March 31 1997.
The past isn't always prelude but I believe the market for Adaptec's products remains fairly strong, primarily in the higher end computer segment. I can't cite statistics, but it seems reasonable to project increasing needs in the corporate world for systems to move larger and larger loads of data faster and farther than current systems can do it. Storage devices are growing to meet the demand for greater capacity, processing power (speed) is rapidly increasing (64-bit Merced is coming; Deschutes and Willamette are here or almost here), so it seems to me that there will be continued demand for devices that Adaptec makes to move data into and out of computers, via ULTRA SCSI, fibre channel, 1394, RAID or whatever.
Let's see what comes out of the Technology Forum Adaptec is hosting next week. We may get a better sense of the future. Take a look at the agenda:
adaptec.com
I think the lawsuits are irresponsible. Do we think that after years of excellent results in expanding markets senior management suddenly decided to bilk the shareholders by misrepresenting earnings, driving up the price and then dumping their stock? I don't. Businesses have setbacks. Good businesses adjust and move forward.
I was very surprised by the earnings last quarter but confident enough to take advantage of the debacle and buy more. This segment of the computer market is hurting right now, at least where the market movers are concerned. They are more interested in the larger companies like Intel, Cisco, and others. Wait until they take their profits at the next scary signs. Maybe they will shift assets back into Adaptec. Sure looks undervalued to me.
Sorry for the long-winded response. If you or someone can challenge my confidence, fire away. I do not have a closed mind. If there are genuine hard times ahead, please let me know.
Starowl |
