Adaptec (ADPT) Message Board

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Technology Stocks : Adaptec (ADPT)

ADPT 15.58

-11.5%

3:59 PM EST

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To: Verona who wrote (1146)	3/9/1998 7:24:00 PM
From: Patient Engineer	Read Replies (3) of 5944

Adaptec's strategy seems to be falling into place nicely. Anyone know what market share for SCSI chips Adaptec has after the Symbios acquisition? It has to be nearing 90% or more. I noticed that Diamond's smallish SCSI boards business is based on Symbios silicon. Now Diamond has to compete with Adaptec in boards using silicon sourced from Adaptec itself. There are probably lots of situations like this that Adaptec will now be able to exploit. Symbios has two fabs, one six inch the other 8 inch. Anyone know how big these fabs are? With just over $600M in revenue, Symbios appears to be massively underutilizing these fabs if they are of typical size (5K wafers per week). The 8 inch fab alone should generate $15M/week in revenue if it is of typical size. This would be $750M/year even without the 6 inch fab and the rest of Symbios' systems business. The fabs will lower Adaptec's costs and open opportunities to grow as a semiconductor supplier. This will help Adaptec at the low end of the market which has been an area of difficulty recently. At the high end, Symbios appears to be very complementary to Adaptec's product lines. From an EPS perspective, Adaptec has taken cash that was doing little and has converted it into a profit stream that should generate tens of cents per share per year in earnings. The only weakness appears to be IDE's winning against SCSI in the low-end. Adaptec can start to reverse this by aggressively pushing down the price of SCSI chips leveraging Symbios' fab capabilities. Put another way, with a PE of 12 times next 12 months earnings and 13 times last 12 months earnings, how does this stock do anything but move up? Where are they vulnerable? Any shorts out there want to convince me not to buy some of this stock?

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