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Technology Stocks : Seagate Technology - Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: MikeM54321 who wrote (1030)	7/19/1999 8:05:00 AM
From: tom pope	Read Replies (1) \| Respond to of 1989

don't know if a straight copy will work, but here goes: >> Opening the Seagate: Welcome back to our mystery money manager whose last comments here -- anonymous, as always -- explained why he thought Apple Computer (AAPL:Nasdaq) was a buy when most of Wall Street thought it wasn't. Now his favorite: Seagate Technology (SEG:NYSE), which he owns and has no current intentions to sell. His rationale: The parts are worth more than the whole. Here's the breakdown: The stock, as of Friday, had a market value of $5.9 billion. However, the parts of the company include 34 million recently acquired shares of Veritas Software (VRTS:Nasdaq), $900 million in net cash, 6 million shares of SanDisk (SNDK:Nasdaq), around 20% of Gadzoox Networks, which is going public this week, an 18% stake in Dragon Systems and its majority interest in Seagate Software. His estimate of the value of those parts: $6.3 billion, or $400 million more than the stock's current price, and that doesn't include the company's principal business as the world's largest maker of disk drives. That business has been pummeled lately, largely as the result of a price war, started by Seagate, to grab more market share at the expense of current earnings, which fell below analysts' expectations in the recently reported fiscal fourth quarter. Meanwhile, Seagate has been an active acquirer of its own stock this year, buying back 10% as of last March with plans to buy another 10%. How does the company unlock value? That's what our mystery man wants to know. Seagate officials reportedly said on their earnings conference call last week that they are looking closely at options regarding the Veritas stock, acquired through last month's sale of a part of its software business to Veritas. In our mystery man's dream world, Seagate would issue new Seagate convertible securities that would be convertible into Veritas common, using cash from the sale of the convertible to buy back more stock. "If they reduce shares from 220 million to whatever," he says, "imagine what would happen when they start making money again." (As profits are spread over a smaller share base, earnings per share rise.) Will our mystery man be disappointed? Seagate officials couldn't be reached.