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Technology Stocks : Seagate Technology

STX 237.49

-1.3%

Nov 21 4:00 PM EST

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To: Robert Douglas who wrote (5287)	7/21/1998 10:32:00 AM
From: Sam	Read Replies (1) of 7841

"The market is not stupid. And so of course it is in the market already." Well, perhaps. But there are many cases of misvaluations in the market--just look at any number of internet stocks right now as being overvalued, and any number of small cap stocks being undervalued. But you are right about the plan being to spin off a portion of the division first, with SEG retaining majority ownership. I have seen valuations of the software division as being anywhere between $1.2 billion on the downside to $4.8 billion at the top. The latter is obviously optimistic given last quarter's flat revenue. One hopes that what SEG said in the conference call is true, that the revenues were flat because of some temporary factors that they believe won't recur ("timing issues" of upgrades and shipments is how they put, I think), and that it will resume 25% growth in the second half. They have strong position in the NT and business intelligence markets. I don't know if they consider their equity stake in Dragon as part of Seagate Software or not, probably not.

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