Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Mark Madden who wrote (1576)	3/31/2000 1:02:00 PM
From: Gus	Read Replies (1) \| Respond to of 1989

And to make it more interesting, consider the following numbers: 1) VRTS has 388.8 million shares outstanding. 2) SEG LBO Formula: 0.467 VRTS + $5.00 CASH (subject to closing adjustments) 3) Valuation milestones (note: 1999 Storage Management Software market was $4.2B; VRTS market share was 12%) At $150, VRTS has TTM revenues <$600M and a cap of $58B At $200, VRTS has TTM revenues <$600M and a cap of $78B At $250, VRTS has TTM revenues <$600M and a cap of $97B AT $150, VRTS has a market cap of $58B AND is ALREADY trading at a Multiple to Industry ($4.2B) of 13.4! NOT Multiple to Revenues or Multiple to Cash Earnings, BUT MULTIPLE TO THE ENTIRE INDUSTRY!!!! 4) Conversion range: ($150 x 0.467) + $5.00 = $75.05 ($200 x 0.467) + $5.00 = $98.40 ($250 x 0.467) + $5.00 = $121.75 5) Sweetening exercise (note: SEG has 215M shares out) ($150 x 0.467) + $5.00 = $75.05 ($1.1B cash out) ($150 x 0.467) + $10.00 = $80.05 ($2.2B cash out) ($150 x 0.467) + $20.00 = $90.05 ($4.3B cash out) ($150 x 0.467) + $30.00 = $105.05 ($6.5B cash out) EACH $5.00 INCREASE IN THE CASH PORTION WILL REDUCE THE PROFITS OF VRTS OR SEG/SILVERLAKE/TEXAS PACIFIC BY $1.1B. Even if you do some fancy mental gymnastics and accept the basic conversion formula, how does one sweeten this kind of deal for the institutions who control 77% of SEG's outstanding shares WITHOUT decreasing the quality of SEG's capitalization and source of funds supporting its improving operations?