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

To: Robert Douglas who wrote (1177)	11/5/1999 12:31:00 PM
From: Gottfried	Read Replies (1) \| Respond to of 1989

Robert and all, article in Forbes makes valuation arguments for SEG... Hidden Drives Falling PC prices are wreaking havoc on makers of disk drives like $6.8 billion (fiscal 1999 revenues) Seagate Technology (NYSE: SEG), the largest independent maker of drives. Seagate's shares have fallen 39% since January to a recent $27. Ann Miletti, a portfolio manager of the $2 billion Strong Opportunity Fund, thinks the stock is a bargain. Her argument centers on the Scotts Valley, Calif.-based company's hidden assets. Seagate owns 35% of software company Veritas, currently trading at a value that would make it worth $22 per Seagate share. Seagate also owns 22% of memory chip maker SanDisk, worth $1 per Seagate share. Add in Seagate's cash of $3 per share, and you get $26 a share for Seagate without considering the company's core business, disk drives. Seagate does more than make cheap drives for PCs. Two-thirds of its sales come from high-performance drives used in servers or network computers that are more immune to price wars. Not that Seagate is falling behind in the low-end business. This year it introduced a cheapo 8-gigabyte drive for the sub-$1,000 market that costs much less to make than products from competitors Western Digital, Maxtor and Quantum. Miletti predicts that the competition could drive Western Digital out of business, leaving more share to the only profitable manufacturer, Seagate. Miletti values Seagate's drive business at $15 per share. Add it to the stock holdings and cash and you have a stock selling at a 34% discount to its sellout value. -DOLLY SETTON forbes.com Gottfried