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

To: Jay Quinty who wrote (14314)	2/13/1998 4:02:00 PM
From: Craig Stevenson	Read Replies (1) \| Respond to of 29386

Jay, If memory serves, the Granite deal was for $220 Million, and those products are just now coming to market. The difference, as I see it, is that Ancor has shipping products NOW. The other thing that we need to bear in mind is that there WILL be some dilution. Ancor can't survive without a cash infusion at some point, either to continue existing operations, or (hopefully) prepare for a storage ramp up. The last Reg D was for $7.4 million (I think), and that wasn't enough to sustain them, and it certainly wasn't enough to prepare for a significant ramp for storage. I think what we need to see is a $15-$20 Million financing package that would cover Ancor's expenses for the early part of 1998, and help them expand and prepare for the storage ramp in the second half of 1998 and early 1999. Assuming profitability late this year, the rest of the money could be used for further development, or just kept in reserve. Given the worst case scenario of a $20 Million financing package, priced at $7.00 (We won't know this one until it's done.), that would add about 2.9 Million shares, bringing us to about 15 million total, fully diluted. (I think ANCR was around 12 million, fully diluted, right?) I also agree that Ancor's valuation should be somewhere around the Granite price, but below what Brocade's IPO will be priced at. I have already said that I think their IPO may garner close to $500 million, since it seems as if they are planning it to occur during the height of the Fibre Channel frenzy later this year. Even so, Ancor should be worth $200 Million, just to be on the safe side. That translates into a valuation of a little over $13 a share. (Note that this is not a buy recommendation. <g>) As has always been the case, Ancor simply has to generate the kind of revenue that will justify that type of valuation. Historically, they haven't done that. Time will tell whether they succeed this time. Craig