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

To: ChiTao who wrote (1383)	3/26/1998 7:57:00 AM
From: Mark	Read Replies (2) \| Respond to of 5944

Chi, I think I see things differently - 1) According to the company profile, the combined company of Symbios and Adaptec will have around 6,000 people. Because both are heavily in SCSI. I suspect a big layoff is unavoidable. Probably 500-1,000. This could incur a huge charge in June quarter. Whilst I agree there will inevitably be some scope for rationalisation in overlapping areas, I think that it is unlikely to be on this scale. A company that is growing as aggressively as ADPT must have difficulty finding people (especially technical people). I would think that there would be considerable scope to "free-up" resources from areas of overlap, and reassign them to new activities which may presently be under-resourced. In this context, the acquisition may go a long way to resolving some of their staffing problems. 2. SCSI is losing ground to Ultra DMA EIDE in desktop market. Look at the big picture, the pie is not growing. unfortunately, SCSI seems to be the only sizable biz for ADPT. Are you sure that SCSI is losing ground to Ultra-IDE ? IDE is certainly losing ground to Ultra-IDE. Surely SCSI is still the only viable disk interface standard for - 1) expansion outside of the box, (U-IDE doesn't support large number of devices or long cable runs), 2) improving performance further inside the box, (U-IDE still only supports single transactions on the interface at one time), The very high end of the HDD market will be Fibre Channel. The high/middle ground will be SCSI, and the "low" end will be IDE/U-IDE. Isn't the question rather whether SCSI can capture market share in the "low" end at the expense of U-IDE ? i.e. provided it can become price competitive, it should become more attractive as it offers tangible advantages over U-IDE ? 3. Don't understand why Adpt bought Read Channel from ADI. Don't they have enough of fire to fight after Symbios? Seems like ADPT want to refocus on disk drive ASIC biz which, again, is not a very profitable area. Have you seen how many VLSI devices are on a high-ish performance SCSI HDD ? It can be 10 or more. ADPT may supply 1 or 2 (?) of these. If ADPT can sell devices which cut this down by 2-3 parts, they can sell a single high-price chip, make more margin, reduce their customer costs, reduce end product costs and help the SCSI market to grow. All of this would be beneficial to ADPT's Revenues and Earnings. As I understand it, the ADI acquisition is technology - not people or facilities. Since ADPT is unlikely to just "rush out" and make this sort of commitment "on a whim", I think we might assume that they have already proven the process/technology, and have now acquired it to guarantee their exclusive use of it ? The Symbios acquisition apparently brings some state of the art mixed-signal fab. It might even be the perfect companion for the ADI technology ? Mark

To: ChiTao who wrote (1383)	3/26/1998 8:12:00 AM
From: Starowl	Respond to of 5944

ChiTao: could you elaborate on your knowledge of Symbios' overlap with Adaptec? I have taken a cursory look at the two companies and believe there are enough differences to make the deal complementary. Also, it is my understanding that EIDE and SCSI have significant differences. And I am curious about your assessment of Adaptec's management. Do you think it is going blindly into the future? Good to hear from you again. Last time you had just returned from the Adaptec Tech Forum. Starowl

To: ChiTao who wrote (1383)	3/26/1998 3:32:00 PM
From: JoeBiker	Respond to of 5944

Chi, Adaptec is a chip supplier to the disk drive industry. Integration of IC's is a big deal in disk drives, it's been going on for years and will continue until it's all on one chip. Take a look at the history of Adaptec disk drive IC's if you don't believe me: their latest chip, the AIC-5460, integrates a DSP, servo logic, an ATA/ATAPI interface, buffer manager, and disk formatter, all of which were individual chips in years past. The next big integration step is the read channel. A major competitior in this market, TI, has acquired SSI, another channel company, to get this technology. Adaptec had to buy ADI's channel technology to stay in the game. I also disagree with your assertion that this is "not a very profitable area". This is flat out not true. The PTS business unit of Adaptec contributes greatly to Adaptec's sales and profits both. Furthermore, the high volumes in these parts contribute to lower fab costs on the chips that go in their SCSI cards.