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

To: Z Analyzer who wrote (3984)	11/2/1997 4:02:00 PM
From: Joe E.	Respond to of 7841

Re your post including "SEG had a goal of growing software to $1 billion. They don't need the cash so why would they sell a portion of this fledgling gold mine to the public, if in fact it really is a fledgling gold mine." Maybe they feel that stocks of software companies are given a higher valuation than stocks of disk drive companies. If the software company can be traded separately, it may raise the market valuation of the whole. 1 - .5 = 2. This works pretty often. Part of the reason it works is that management of a subsidiary business is smothered by the bigger main business until it is spun off. Another (related) possibility is that they have not been all that successful with the software investments, and feel it can be more successful with a separate management. It may be that they can't get a strong leader for that part of the business because it is tied to the larger Seagate, with a dominant boss. You could get a good person to head a billion dollar software business that traded independently. They are creating wealth for their stockholders if they are successful in either approach, and this is why they are paid,