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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (91231)	7/4/2002 12:55:07 PM
From: Jdaasoc	Read Replies (3) \| Respond to of 99280

ADPT is an interesting company. They just have about bought out the bulk of their competitiors which gives them that 50%+ gross margins you talk about. I think in last 15 years they have just about bought out at least 6 competitors and face no major rivals for SCSI conrollers. However, there is IMO a finite market for their well established SCSI controller products. In the old one Novell server fitted all users and services, you would have only have considered using ADAP SCSI contorller in hard drive system of the server. In this Microsoft "add a service, add a server" world we have now, considerable cost savings can be had by using entry level IDE based servers. Only the high end applications need the performance and scability that SCSI offers, sort of like RDRAM. ADPT has no advantages in the areas of computing not involving SCSI controllers however many times they have tried to expand their focus. Currently, with small number of large OEM customers in Asia of bulk SCSI chips and US distributors of boxed controller cards all fighting a real profits problems, I would watch their recievables. We are entering a business cycle where not all of a companys customers are going be around for the future. ADPT doesn't have the situation where every OEM and enduser buys from them so really have to watch who they are dealing with. Currently recievables are now $71 M or 2 months of total sales up $ 41 M from last quarter. I also see that they have doubled LT debt added about $225 M in debt. Either they are going to buy some other computer harware technology or need that cash cushion to ride them through the current hard times of increasing unprofiablity. It gets me to wonder what is all of the approx. $ 500 M in non cash current assets on the books that doesn't seem to be drawn on as they spend more money then they take in. In conclusion, they either get profitable quickly or someone like Intel or IBM is going to make them cash book value offer if they don't turn things around.