As to value, at least in comparison to the discussion of anticipated pricing for Brocade, best indicators for Ancor suggest a normalized revenue stream of $3 million, which perhaps may reach the $8 million suggested as necessary for breakeven, by Q4. If if plays out that way, and we assum Q2 at $3 million, Q3 at $5 million and Q4 at $8 million, that gives Ancor a run for 1999 of $19 million, compared to Brocade's $24 million in 1998, and a most recent Q of $8 million. . .which may suggest an increased 1999 run rate closer to $35 million, or nearly twice that of Ancor.
Right now, the Brocade customer and partner list may look to the street as being more impressive than the Ancor customer list, although perhaps Ancor's current customers may turn out to be more solid than Brocade's in terms of actual purchases, and there are far more announcements to be made, than have been made already.
Based on the foregoing, and assuming that Brocade may be entitled, at this time based upon historical accomplishments, to a greater Price to Sales ratio than that to which Ancor is entitled.
If Brocade plays out to a market cap of $400 million, based upon $27 million shares, perhaps Ancor is entitled to a fully-valued cap of just about half of that, and no more, which would be approximately $8/share. . . the buyout price suggested across the message boards months ago. That price represents a nice premium of 35% over current market, and can increase dramatically thereafter if Ancor lands more contracts. On the other hand, a $200 million market cap will only be justified, at least in comparison to the discussion of Brocade, if Ancor hits its target of breakeven by year end.
On the other hand, since 3Com apparently is entering the fray, won't others want to look harder at the fibre channel market and, perhaps, pay a healthy premium for switch technology, thereby suggesting a full valuation north of $8-10?
Pat |
