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Technology Stocks : Adaptec (ADPT)
ADPT 18.62+14.1%Nov 21 9:30 AM EST
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To: slipnsip who wrote (1549)4/1/1998 3:42:00 PM
From: slob  Read Replies (1) of 5944
 
David, Layoffs are NEVER good for high tech semi companies.

A say this because despite all the Financial analysis that we might do, the real value within ADPT is people not property. It is commonly said that your most valuable resource goes home at 6pm each evening. Lets look at ADPT! It sells at P/B of about 2.9, what this means is that investors are paying nearly 3 times the asset value to get the company. So 2 times ADPT's asset value is for good will, patents and PEOPLE. Accepting that most of the Products have less than a 3 year life time you quickly realise that it's people your paying for.

Now what happens when layoffs occur:
Firstly: Management tries to weed out the least productive, easiest to replace / out-source elements of the workforce.
Secondly : Your best engineers see a less than certain future and decide to look elsewhere or become your competition.
Thirdly : You end up having to scale back on all your existing expansion / development plans. This angers a lot of the young engineers that just saw their projects slashed and with it go their bonuses and promotional opportunities. They are by far the most mobile element of your work-force, so they're gone.

Result: Down-ward spiral, as key people leave your forced to shut down more and more projects also your not making money so your options are worthless (options are at least 1/2 of the salary for most EE's in IC design). If you doubt this look at what happened to CRUS and OPTI.

Anyway, that's my opinion

Slob
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