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Technology Stocks : Adaptec (ADPT)
ADPT 15.76-1.3%Jan 9 9:30 AM EST
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To: Charlie Smith who wrote (1086)2/22/1998 12:06:00 PM
From: Zeev Hed  Read Replies (1) of 5944
 
Charlie, thanks, this is a little more than I expected. It means that only $350 MM in assets are actually transferred to Adaptec, at least on the book. I presume that from a tax point of view, Adaptec would want to take as big a hit as legally possible. It is difficult for me to believe that with sales of $600 MM the inventories and receivables are less than $200 MM and that leaves only $175 MM for physical plants (including a 6" and an 8" wafer fab). These fabs are probably carried on the book at very low cost (depreciation of semi equip can be as fast as 3 years and rarely more than 5). That also means that we are going to get a hit to the balance sheet of about $2. share at once.

The market may not like it initially, but long term, I think that the better pricing power in the ISPC business would rapidly cover for these deficiencies in the deal. I still like it.

Zeev
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