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

To: Z Analyzer who wrote (1632)	4/2/2000 1:23:00 PM
From: MikeM54321	Respond to of 1989

Z- Point well taken. ES- Oh. Sorry about that. I did misunderstand your first reply to me. Now I'm clear on your point. There's only a handful of people that do like the deal. And they are the ones to stand to make hundreds of millions of dollars. Maybe billions of dollars to split up among themselves in a few years or so. -MikeM(From Florida)

To: Z Analyzer who wrote (1632)	4/3/2000 2:03:00 AM
From: Gus	Read Replies (2) \| Respond to of 1989

Some other points to consider: 1) Was SEG concerned that the size of its investment portfolio was leaving it open to a hostile takeover? That has been fairly obvious for some time, but hostile takeovers simply don't work with technology companies because technology companies are competing for perennially scarce technical talent using option packages that become vastly less appealing and less competitive under a burdensome capital structure vis-a-vis other technology companies. Make no mistake about it. SEG owns 33% of VRTS, which despite its rich currency and unique interest in its shares owned by SEG, was in no position to even look at SEG the wrong way unless SEG was complicit in the act to create the legal fig leaf necessary to divvy up the assets between VRTS and the buyout group. Note the one-sided nature of the transfer of assets to Veritas in order to strenghten the VRTS stock portion of the conversion equation. Does VRTS really have any clout to stop SEG from buying a boatload of VRTS options and dumping VRTS shares in the open market over an extended period of time? Of course not. And they expect us to believe that only VRTS can make this deal happen. 2) Only dilettantish armchair buyout artistes and wannabes can praise the tax efficiency of this tax avoidance scheme without considering its true costs to shareholders. SEG was absolutely under no pressure to trigger all its taxable events (stock sales) in a short period of time. The tax-deferred status quo was clearly superior to this scheme, and remains so, because of the role of the investment portfolio as an INTERNAL FUNDING ENGINE to expand the core manufacturing business and support expansion into other areas with better growth prospects. How many companies do you know have the kind of access to billions of ready cash that SEG has as it is presently configured? And they're going to swap that enviable capital structure for one ostensibly involving more debt? Give me a break. Any manufacturing operation with the right products at the right time of its industry cycle is a veritable cash flow machine. That's just the basic leverage in any manufacturing model. Those supporting the deal -- SEG employees, VRTS employees, VRTS institutional shareholders, etc -- will clearly try to overplay the cyclical nature and valuations of this industry while downplaying the genuine prospects fairly self-evident in SEG's product lineup and other assets. The sad thing is that there are enough greater fools at the retail level out there that will allow this deal to prosper unless the shareholder lawsuits bear fruit. I fully expect that there will be a contest of wills, between institutions that will try to move more of the SEG stock into friendly hands and institutions that will try to sweeten the deal. Insiders own 17%. Institutions own 77% And there are about 25-30 million shares that will fully vest once the deal passes. Keep in mind that the billions of dollars worth of value -- including the future cash flow of a Six Sigma manufacturing operations with powerful product cycles at an early stage of a major industry recovery -- being taken private will turn this buyout group into a M-A-J-O-R Silicon Valley power base, unique in terms of its internal funding engine (SEG's core manufacturing operations) and as a source for future lucrative deals. The anticipatory nature of Wall Street suggests strongly that there will be those will be all too willing to wait in line and pucker up and those who simply won't no matter what the price. The metaphor of the VERITAS windfall as a tip to move the real assets and earnings power to the LBO group is the relevant one and a sufficient cause for dry puking to those who are reacting viscerally to the calluous self-dealing and naked greed displayed by this deal. The LBO group is nothing without SEG's BOD and management. There simply is no excuse for any retail investor to get involved in this increasingly tawdry affair on a buy and hold basis without understanding the discipline of tracking product cycles, industry cycles and economic cycles. How else can one appreciate the magnitude of the transfer of assets involved? Similarly, there is simply no defense available for any media outlet against the legitimate charge of journalistic prostitution (by omission or by commission) should the supporters of this deal be allowed to peddle their side without being challenged vigorously on the basis of product and industry cycles, at the very least. Put simply, if they get the requisite shareholder approvals AND survive the legal gauntlet then they deserve their billions. If they don't then nobody in the BOD and current management should remain and get in the way of the expansion of SEG's business.