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

To: Sam who wrote (1603)	4/1/2000 12:25:00 PM
From: Lynn	Read Replies (2) \| Respond to of 1989

Thread: There is an article on the SEG deal in this week's issue of _Barrons_ that everyone should try to read. I received it from a friend via PM so I do not know it's title. In it, Bob Willens, the tax expert at Solomon Brothers: "... thinks Seagate should explore a transaction with Veritas patterned on deals that allowed IMS Health to monetize its minority stake in Gartner Group on a tax-free basis, which was also done by Harcourt General involving its stake in Neiman-Marcus. Willens believes there's nothing in the tax code to prevent Seagate from swapping its Veritas stock for a new class of Veritas stock with 80% voting rights, which would allow Seagate to distribute its Veritas stock to holders on a tax-free basis. Such a deal would require Veritas' cooperation. Under this scenario, Seagate would still be left with its disc-drive business and other assets while giving its holders the full value of Seagate's interest in Veritas." [end of quoted section] Although this idea sounds very, very good to me I have to ask why Bob Willens waited until now to present this solution. It was no secret that SEG was looking for a way to unleash VRTS's value to shareholders. For just one example, on March 13, Gottfried posted the URL to an article on this thread (posting #1405): Seagate's embarrassment of riches with Veritas stake BY SCOTT HERHOLD Mercury News Staff Writer mercurycenter.com In this article, it is more than obvious that Steve Luczo was willing to listen to anyone who had a solution to the VRTS problem. Here is an edited version of the article: [quote begin] Steve Luczo looked a little weary -- and wary -- at a Goldman Sachs investment conference in Palm Springs last month. A persistent investor was quizzing the Seagate Technology Inc. (SEG) chief about what he intended to do with Seagate's fabulously valuable stake in Mountain View-based Veritas Software (VRTS). After parrying the investor's questions good-naturedly for a couple of minutes, Luczo told him -- jestingly -- ``Look, why don't you come up here and I'll tell you everything we've considered. Then you can be an insider and I'll tell the SEC to watch your trading.' The sally shut the investor up. But it's hardly quelled the barrage of questions that Luczo, a former investment banker, has had to answer over the last few months about Veritas. As he told the Goldman investors, ``I get a little tired of being asked about this every 20 minutes.' [snip--large, informative section] Yet Luczo is being badgered by investors who want to know when they can get a piece of Veritas -- in short, when the company can begin unlocking the value of its investment. Luczo has said he understands this desire. But there are huge tax obstacles in the way. A Seagate spokesman, citing the quiet period before the company's upcoming earnings announcement, declined to answer questions. But the company has said publicly that it will entertain suggestions from anyone who can help it structure an answer to this dilemma. ``If I had an easy answer to that, Seagate would give me a lot of money,' says Paul Fox, an analyst with Banc of America Securities. [snip--section where author presents a number of suggestions] If you've got a better answer, you should try to reach Luczo at Seagate's Scott's Valley headquarters (www.seagate.com). There might be a very handsome reward for anyone who figures out the answer. [end of article] Lynn