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Technology Stocks : Adaptec (ADPT) -- Ignore unavailable to you. Want to Upgrade?

To: Milk who wrote (1071)	2/20/1998 5:18:00 PM
From: go_bucks	Read Replies (1) \| Respond to of 5944

I'm not a financial guy but I don't see how these two statements contradict each other. Adaptec is using its cash reserve to buy Symbios.. (SKorea needs cash badly that's why ADPT is getting a sweet deal) That's why its balance sheet is going to be dramatically altered. Since it's using cash to acquire, earnings will not be diluted. and since they don't have much overlap, it's very likely (as the management stated) that the acquisition will be accretive to earnings the first year. No contradictions at all... maybe some financial whiz can give some more insight from a pro's point of view. Thanks Charlie

To: Milk who wrote (1071)	2/20/1998 6:16:00 PM
From: Maverick	Respond to of 5944

S&P Places Adaptec's Rtgs on Watch, Neg Re:Symbios Acq NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 2/20/98 --Standard & Poor's today placed its double-'B'-plus corporate credit rating on Adaptec Inc. [Nasdaq:ADPT - news] and its double-'B'-minus rating on the company's convertible subordinated notes on CreditWatch with negative implications. The CreditWatch placement follows the company's announcement that it has agreed to acquire Symbios Inc. from Hyundai Electronics of America for $775 million. The CreditWatch listing reflects concerns about potential acquisition integration issues. Cash levels in excess of $700 million will be used to fund a significant portion of the $775 million cash acquisition cost; the remainder will be debt-financed. Symbios, which had 1997 revenues exceeding $600 million, will be Adaptec's largest acquisition to date. Standard & Poor's will assess the profitability and cash flow profile of the combined operations, as well as Adaptec's strategic and financial objectives before determining any ratings impact. Adaptec's ratings reflect its leading position in a niche market and good cash flows, offset by its still narrow business base and the challenges of managing its growth. Milpitas, Calif.-based Adaptec holds the dominant market share for ''small computer systems interface'' (SCSI) chips and adapter cards used to connect high performance peripherals to PC-based servers and advanced desktop computers. High gross margins, near 60% for the last two years, are derived from the company's solid SCSI market position and the product's significant software component. Substantial R&D expenses, close to 15% of sales, are expected to broaden the business base over time. Operating margins in excess of 25% could decline somewhat as the company seeks to expand its markets, and due to ongoing profitability pressure across the mass storage industry, Standard & Poor's said. --CreditWire