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Technology Stocks : The New QLogic (ANCR) -- Ignore unavailable to you. Want to Upgrade?

To: Mark J. Hardie who wrote (26027)	2/7/2000 8:28:00 PM
From: Greg Hull	Read Replies (1) \| Respond to of 29386

Mark, <<I doubt that anyone would want ANCR to make this type of deal with all the OEMs. >> I have thought about this off and on in the last few months, and I have not convinced myself that I would not want ANCR to make more deals of this sort. If they would issue warrant to, let's say, EMC and IBM for 1.5M shares at today's price with similar vesting requirements, it might be good for ANCR in my mind. The major negative effect would be GAAP reporting. This would discourage many individual investors, but how does it affect the fund manager's perception of the company? The pro forma report might be astounding while the GAAP report is massively in the red. This would also mean that ANCR's bankroll (retained un-earnings) would be getting thicker and thicker. What would ANCR do a year or two from now if they had hundreds of millions of dollars in the bank? If, in fact, the sales discount from the Black-Scholes value of the warrants is tax deductible, the size of the bankroll increases at a faster rate. It seems to me that it would make ANCR even more attractive as take-over candidate. High revenue, very strong balance sheet, and a tax loss carry-forward of 10s of millions of dollars (or more). Why do Fidelity and other funds buy ANCR? From what I have read it is for pro forma expectations. Would ANCR have a higher stock price today if there were no SUNW warrants? I don't think we would have had the run-up since June if GAAP results are what count to the professional money managers. Greg