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Technology Stocks : The New QLogic (ANCR)

QLGC 16.07

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Aug 24 5:00 PM EST

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To: Craig Stevenson who wrote (15549)	4/5/1998 11:24:00 PM
From: George Dawson	Read Replies (1) of 29386

"In my case at least, there have been several fundamental changes that have made me MUCH more cautious." Craig, Are you working for Kinnard or what? Seriously, I couldn't agree with you more on the shipping/implementation schedule issue. Now that there is some degree of standardization any delay will hurt Ancor the most. Their current revenue sources are unclear. Even if they get an OEM and ramp up production - those revenues with not be immediate. I think that management did say not to expect major announcements until the second half of 1998 and they are on that schedule. On the issue of technical superiority - that is still a question for me. The datacom article cleared up a few things, but the Silkworm class 2/3 versus the MKII class 2/3 may be a wash. We have all heard the EDS rumor of no single source OEM. As I was biking today - I thought of the potential benefits. If it is true, EDS may help clarify which applications benefit from class 1 and assist others in making that decision. The other question - assuming that the MKII and Silkworm are the only switches being given serious consideration is - why would there be a choice? If the decision is on technical merit and price - does this mean somebody has to accept lower than expected margins on the bid? If EDS really wants class 1, what can you do to stay competitive except bidding a lower price? The only other explanation would be some institutional bias for no single supplier. There also seems to be a concerted effort, on the part of several Ancor detractors to spread misleading information about their products. I won't bore everyone by reviewing all of this information again. Their motivation is clear. I am already on record in previous posts with my opinion on these tactics. I don't buy the argument that the tech community is any more rational than other communities and that OEM decisions will not be highly biased by factors that we can only guess at. I am less sure than you are that Ancor will succeed. I know that for me it makes sense to take the chance that they will - rather than wait to buy in after an OEM. At that time it will be too late. In my opinion there will be limited upside potential. I also see very limited upside potential for other FC IPOs - especially if they are issued after significant OEM deals are signed. All in my opinion. George D.

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