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

To: Cary Salsberg who wrote (1092)	2/23/1998 9:09:00 PM
From: Maverick	Respond to of 5944

Post-deal tidbits take a sizable bite out of Adaptec's stock price Feb. 23, 1998 BY ADAM LASHINSKY Mercury News Staff Writer SAVVY investors agree that reading the fine print is crucial. Even more important -- but less feasible for the investing masses -- is listening to the conference call with analysts, which is where the real action happens. The difference between the written and spoken word goes a long way toward explaining why the stock of Adaptec Inc. (Nasdaq, ADPT) plunged Friday, although the company had unveiled a blockbuster acquisition Thursday at a ''fire sale'' price. Investors read in news reports and Adaptec's news release that the Milpitas-based company is picking up Symbios Inc. from its distressed South Korean owner, Hyundai Electronics America, for a relative song: $765 million in cash plus $10 million assumed liabilities. That's comparatively puny because a ''multiple'' of about 1.2 times Symbios' $620 million in current-year sales is small for acquiring a high-tech company. And Symbios will add immediately to Adaptec's earnings. All true, but snippets from the post-announcement conference call and other tidbits explain why Adaptec's stock fell 9 percent to $23.31 Friday in heavier-than-usual trading. In the call, Chief Financial Officer Paul G. Hansen dropped a bomblet unrelated to the acquisition. He alerted analysts that revenues from the company's semiconductor business would be about $10 million less than previously expected. And the company's earlier guess was $10 million below the product line's revenue for the fiscal third quarter ended Dec. 31.

To: Cary Salsberg who wrote (1092)	2/23/1998 9:10:00 PM
From: Maverick	Read Replies (1) \| Respond to of 5944

The maker of adapter cards that connect PCs and disk drives had hoped gains in its main product line would offset declines in the chip business. Hansen said Thursday such a scenario ''is going to be increasingly difficult.'' Moreover, the company revealed that while its price for Fort Collins, Colo.-based Symbios is reasonable, Hyundai paid somewhat more than $400 million for the company three years ago. Adaptec should know; it bid for Symbios then. Hyundai invested heavily in the semiconductor maker, whose profit margins generally are lower than Adaptec's, but it's still offloading the unit for nearly double what it paid. Finally, not mentioned but obvious to anyone whose memory extends one month, Adaptec said Jan. 20 it would repurchase up to 10 million of its own shares on the open market. That's a typical response from a company whose stock has been hammered. Investors generally like buybacks because when companies reduce the supply of shares, stock prices tend to rise. Adaptec's stock dropped from more than $50 as efforts by PC makers to reduce inventories have slowed component purchases. The Symbios acquisition, which will soak up all of the company's $728 million in cash and force it to borrow more, nixes the buyback program. Says Hansen: ''When we found out we had this great opportunity to buy this excellent company for 1.2 times sales, that took priority over all our resources.'' One analyst, Scott Randall of SoundView Financial Group Inc. in Stamford, Conn., cut his recommendation from ''buy'' to ''hold.'' Another, John Lazlo of Paine Webber in New York, shaved three cents from his earnings-per-share estimates for Adaptec's current quarter. Incidentally, while investors with the time and energy can pore over securities filings, they often can't listen to conference calls. An Adaptec spokesman says the company's teleconferences are ''directed at institutional investors.'' That's understandable up to a point, considering the costs to the company. But it's yet one more example of how deep-pocketed investors have a big advantage over small fries.