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To: Sarmad Y. Hermiz who wrote (10833)	10/29/2003 3:40:38 PM
From: Sam Citron	Respond to of 11057

12:50 ET Seagate Tech provides update regarding SEC request for info (STX) 24.25 +1.35: Co provided an update to the recent investigatory request by the SEC for third-party research analyst reports on the company from January 1, 2000 through August 30, 2003. On October 28, 2003 the co received additional information from the SEC regarding the focus of their initial investigatory request. Co believes the SEC is examining the allegations raised by a former employee that was terminated as previously disclosed in IPO prospectus. The former employee has alleged he was dismissed b/c he asserted co had incorrectly reallocated certain expenses between costs of goods sold and research and development costs in its financial statements. The reallocations, which the co did record, were related to a broad restructuring that changed the focus of activities at various locations as between manufacturing and research and development. These reallocations had no impact on either revenues or earnings and were detailed in financial statement contained in the IPO prospectus. www.briefing.com

To: Sarmad Y. Hermiz who wrote (10833)	11/7/2003 1:35:58 PM
From: Sam Citron	Read Replies (1) \| Respond to of 11057

A Ruckus Over Seagate's Quiet Drives [Barrons Online 11.3.03] DISC-DRIVE MAKERS HAD A GOOD THIRD QUARTER. So why have their shares crashed? Maxtor's sales rose 30% to $1.1 billion, and the No. 2 drive maker swung to a profit of $30 million, or 12 cents a share, after losing money last year. At market leader Seagate Technology, sales rose 10% to more than $1.7 billion, while earnings jumped 80% to about $200 million, or 40 cents a share. The reaction: Maxtor shares dropped 17% and Seagate's crashed 25%, before recovering slightly to 13.68 and 22.98, respectively. Investors probably didn't like Seagate's report that prices and margins have softened since the summer. What investors surely didn't like, however, was Seagate's disclosure of an investigation by the Securities and Exchange Commission. At the Seagate shareholder meeting Wednesday, chief executive Steve Luczo said that the SEC probe stems from the claims of a former employee who alleged that Seagate improperly allocated expenses when it restructured its business. Seagate calls the whistleblower's claims meritless, saying its expense allocations were proper and didn't affect earnings. Luczo and an investor group took Seagate private in November 2000 at a price of $1.7 billion, which really represented about $1 billion for the business, given the cash on Seagate's balance sheet at the time. After slashing operating expenses, Luczo and the buyout group offered a 17% stake to the public last December in a $12-a-share offering that valued Seagate at about $5 billion. The Seagate buyout has gone down in history as one of the few smart moves of the bubble market. If Seagate's whistleblower case was enough to cause investors to clip $3.5 billion off the company's recent $15 billion market valuation, then perhaps investors ought to remind themselves of another lawsuit that's overhanging Seagate. It's a patent and trade secrets suit filed in July 2000 in Manhattan's federal district court by the Massachusetts Institute of Technology and a tiny private firm called Convolve. Seagate duly disclosed the Convolve suit in its December 2002 prospectus, along with the ex-employee whistleblower case. Like most prospectus verbiage, however, the Convolve disclosure distilled away the flavor of this particular dispute. Almost 15 years ago, Convolve licensed technology developed by MIT engineers for dampening the noise made by motors. According to Convolve's complaint, the company approached Compaq Computer in 1998 about using the technology to quiet the read/write heads in disc drives. The noise of a disc drive can double when the read/write head is seeking out a bit of data -- with a chirping, chattering, clicking noise. That noise may once have only bothered edgy types who sleep in isolation tanks, like that superhearo Daredevil. But with drives showing up in video recorders and MP3 players, every decibel counts. Compaq urged Convolve to talk to Seagate. According to Convolve's complaint, Seagate then stole the quieting technology and used it to introduce the world's first silent drive in 2001. Seagate has counterclaimed that Convolve swiped the drive maker's silencing secrets. Convolve sued both Seagate and Compaq (now part of Hewlett-Packard), and asks $800 million in compensatory damages. Seagate spokesman Brian Ziel says the firm can't comment on litigation, but adds that the drive maker hasn't changed its position that Convolve suit lacks merit. online.wsj.com