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

To: KevRupert who wrote (1485)	3/29/2000 7:16:00 PM
From: KevRupert	Respond to of 1989

Seagate Valuation Article: Just to refresh everyone's memory of what we (seg shareholders) are giving up! I know this has been posted before, but let's get the facts out there in real time. individualinvestor.com TAUB TALK: Seagate Soars, But Gets Cheaper individualinvestor.com Editor: Steve Taub (3/9/00) Remember back on January 31 I pointed out how cheap Seagate Technology (NYSE: SEG - Quotes, News, Boards) was given its stake in Veritas (NASDAQ: VRTS - Quotes, News, Boards) and a couple of other Internet stocks? see story Well, since then Seagate has jumped 38%, closing Wednesday at $54.81. Not bad, eh? Like this Article? Well, look what has happened to Veritas since then. For starters, its shares split 3-for-2 the other day. Now, adjusted for the split, the stock has jumped nearly 60% even though it closed down $4.25 at $158.81 on Wednesday. So, you know what? Seagate is now even cheaper than it was five weeks ago. How do I figure? Let's run through the math, class. Got your pencil and paper? Good. Seagate's market cap is currently $11.8 billion. Thanks to the split, it now owns 128 million shares of Veritas. This stake is currently worth about $20.3 billion. So, already Seagate is trading way below the value of its Veritas shares. But wait! Seagate also owns 10 million shares of Sandisk Corp. (NASDAQ: SNDK - Quotes, News, Boards) thanks to a 2-for-1 split. And on Wednesday its shares jumped $27.63 or more than 20% to $162. So, this means that Seagate's stake is worth $1.6 billion. But wait! Then there are its five million shares of Gadzoox Networks (NASDAQ: ZOOX - Quotes, News, Boards). Its stock closed at $55.31 on Wednesday, about half its 52-week high. So, this stake is currently worth $276 million. But wait! Did you forget that Seagate also has $800 million in cash, net of debt? Okay, now let's add all of these numbers. Veritas plus Sandisk plus Gadzoox plus net cash equals about $23 billion. So, you know what all this means? Seagate is really cheap. It is currently valued at just 51% of the total value of its three stock holdings and cash. But wait! There's more. Seagate owns a sizable stake in privately-held Dragon Systems, a voice recognition company that is receiving a buzz of late for its technology. Seagate also has stakes in a number of other small companies. And don't forget the fact that Seagate is a profitable disk drive company with about $6.5 billion in revenue and is expected to earn $0.52 per share in its fiscal year, which ends in June. For the following year the consensus forecast is $1.24, although at least one analyst has penciled in $2. A value tech/Internet stock. But, you know what? One hedge fund manager suggests that Veritas turn around and buy Seagate. Think about it: Veritas can offer 128 million shares for Seagate, a nice premium for shareholders, which would cancel out the 128 million shares that Seagate owns. In other words, it would be a wash. So, Veritas could put up no money, and get the stakes in Sandisk, Gadzoox, Dragon Systems, a handful of small companies as well as a disk drive company. All for free. Not bad, eh?