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Technology Stocks : Ampex Corp: Digital Storage
AMPX 10.15-2.2%Jan 15 3:59 PM EST
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To: Mary Beth Ford who wrote (1076)12/27/1996 1:01:00 PM
From: Daniel Schulman   of 3256
 
> Oh yeah of little faith. I am somewhat surprised by many of your reactions. Did you really believe that the stock was going to go flying up with the announcement of one contract?

I think you wild-eyed optimists are missing the point. I for one am very strong on Ampex's future prospects. I bought it on the pink-sheets, I continue to hold the majority of my shares, and I picked it as one my 3 for SI's best growth in 1997.

The true point is in your misuse of the word contract. There is NO contract to sell keepered media or receive royalties from its manufacture. Look at the announcement from Maxtor's point of view. According to the agreement they receive a discount relative to potential future manufacturers on producing keepered media if and when they decide to produce it. And what are their responsibilities in order to get this discount? Absolutely Nothing! Maxtor has not committed themselves to producing a single keepered drive. In other words, we cannot fully evaluate the news release without knowing Maxtor's intentions. Either they are planning on gearing up for keepered media production (as everyone here seems to be assuming), or they plan on a wait and see attitude. Under this latter strategy, they could have no current plans for production unless their competitors start making keepered deals with Ampex. If and when this occurs they could then step in and undercut them with their sweetheart deal.

In some respects, Ampex's willingness to sign a deal without a commitment to production could be seen as an act of desperation to fulfill their earlier stated desire to ink *something* before the end of the year.

Again, I am long on Ampex. It is seemply my desire to provide a reasoned counterbalance to the over-enthusiasm of responses to the Maxtor announcement.
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