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Technology Stocks : Seagate Technology

STX 278.47

+1.0%

Nov 6 4:00 PM EST

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To: accountclosed who wrote (6151)	11/2/1998 9:02:00 PM
From: Stitch	Read Replies (2) of 7841

Antoine, Thanks for the kind remarks. I honestly can't fill in the missing blank on SEG's valuation, that is to say, the Dragon System's holdings. The part of the Software operation they are retaining (Enterprise Storage Mgt. or EIM) did $186 m in FY98. That group includes back-up software which just recently selected by Compaq's Sorage Works Div (part of the old DEC). In the announcement they said "announced that its new Seagate Backup Exec Shared Storage Option is the first Fibre Channel-based backup software component to be packaged with the Compaq StorageWorks Enterprise Backup Solution." Like you I really like SEG's commitment to FC. What are revenue estimates for the surviving division after the sale of the other to Veritas? I wish I knew. But with blessings by Microsoft on NT, and now Compaq at their high end enterprise systems, it looks very good to me. Here is a couple of links to storys for more info. biz.yahoo.com biz.yahoo.com Then, of course, we have the quandary of trying to assay the value of their Dragon holdings. According to a Fortune Magazine article they did $6.8 million in sales in the first four months of this year with their software package called "Naturally Speaking". This was a little better then their primary competition (IBM with "ViaVoice). We have used both in my office with The Dragon product the hands down winner in terms of error rate and response. But neither are ready for prime time IMO. We should note that this market is expected to grow to $3 billion by 2001. I believe it is the next killer app. In addition there is other market revenue potential such as licensing in hand held devices, and OEM agreements with PC makers and other software vendors. Here are links to Dragon's press releases and the Fortune article I mentioned. dragonsys.com pathfinder.com What I like about SEG's investment here is that it could be a two bagger. If their bet pays off it will be both in their equity stake in Dragon as well as the increased storage needs from the spur this app may give the PC market. However, I cannnot think of a way to put a finite value on SEG's 25% stake in this company other then to say I like it. I am still thinking we will see $ 31 a share in the relatively near future barring global economy factors. And on that scene I am becoming cautiously optimistic. Sorry I could'nt answer your questions better and maybe one of our other threadsters could help. Best, Stitch

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