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

To: Bob Howarth who wrote (1209)	11/20/1999 6:33:00 PM
From: LK2	Respond to of 1989

Barrons, 99-11-22, The Trader, touts SEG as undervalued asset play For Personal Use Only (Am only including the section on SEG) >>>>>>>>>>>>>>>>> ================= Another intriguing asset play is disc-drive maker Seagate Technology. Why? Because Seagate owns a stake in highflying Veritas Software that's now worth more than Seagate's current stock price. Here's the math: Seagate finished the week at 38 3/4, up 1 3/4, giving it a market value of $8.7 billion. It owns 61 million shares of Veritas, whose shares have risen almost fivefold this year to 145 1/2, including a 29-point rise last week. Seagate's Veritas stake is worth $8.9 billion, or about $40 per Seagate share. Cutler notes that Seagate also owns about $800 million of stock in SanDisk and Gadzooks and has $1 billion in net cash after debt, which add up to nearly $9 per share. So the total value of Seagate's equity holdings and cash is almost $50 a share. Moreover, Seagate is the only major disc-drive maker earning money. The company had operating profits of seven cents a share in the September quarter and is expected to earn about 40 cents a share in its fiscal year ending June 30, 2000. Seagate management clearly believes the stock is undervalued. The company has been a huge buyer of its own stock, repurchasing 48 million shares for $1.5 billion, nearly 20% of the stock outstanding, in the past year. And Seagate recently authorized the repurchase of another 50 million shares. It now has 224 million shares outstanding. Seagate is up 27% this year, but it's still below its peak of 54 in early 1997 despite the ballooning value of its Veritas stake. Should the disc-drive market ever revive, Seagate's profits could rise sharply. It earned $3 a share in 1997 when market conditions were good. Brandywine's Cutler says Seagate is worth at least $70 a share. This analysis, he notes, puts a conservative valuation on its disc-drive business and accords no value to the company's business-intelligence software division and its 35% stake in the private Dragon Systems, a leader in the hot field of voice-recognition technology. Little wonder Seagate has been mentioned as a potential takeover candidate. Copyright ¸ 1999 Dow Jones & Company, Inc. All Rights Reserved. ================= <<<<<<<<<<<<<<<<<