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Technology Stocks : The New QLogic (ANCR) -- Ignore unavailable to you. Want to Upgrade?

To: Kerry Lee who wrote (11666)	10/22/1997 3:44:00 AM
From: Fang Li	Read Replies (1) \| Respond to of 29386

Kerry, now we see a working adapter from Emulex, and a working controller from HP, plus a better and cheaper switch from Ancor. Does Ancor stand a chance to get Sequennt business back? After all, class 1 is what Sequent wanted. At least, Sequent should try it and make a comparison.

To: Kerry Lee who wrote (11666)	10/22/1997 5:21:00 AM
From: Douglas Nordgren	Read Replies (2) \| Respond to of 29386

Kerry, The Emulex press release for the announced LP6000 support of SCO & Netware brings yet another fibre channel adapter vendor into the purview of a broader fibre channel market, which is good news for the FC market, but may not be good news for Ancor depending on their long term sales strategy regarding the adapter market. Ancor's gross profit for the first six months of '97 decreased from '96's 45.7% to 40.2% of sales, attributed to the threefold increase in sales of low margin adapters. Increased competition may lead to decreasing sales and share of the adapter market. It would be important to find out what portion of revenue comes from their adapter sales now and what their plan is for competing in the adapter market. Will they continue to sell them, or not, in the face of increasing competition and pricing pressures? How low can their margin on adapters go before their sales become fiscally unfeasible? Or will the high margin switch sales prop up the slumping adapter margin? I expect that as switch sales ramp up, Ancor would slowly exit the low margin adapter market, perhaps limiting their offering solely to bundled switch packages, or to not offering them at all. What affect would this have on revenue stream? Excuse me if this subject has been addressed before. It's just that I've been so preoccupied with The Switch that I forgot about the adapter arena until the Emulex announcement reminded me of it, and couldn't recall the subject being discussed here. Wouldn't want to overlook something that may be important: would never hear the end of it. Comments, oh wise one? <g> Douglas