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

To: Erik Lundby who wrote (15760)	4/15/1998 12:47:00 PM
From: Craig Stevenson	Read Replies (1) \| Respond to of 29386

Erik, You raise a number of good points. Unfortunately, we probably won't know the REAL answers until the conference call. <g> The aftermath of the Sequent deal is what prompted me to raise this issue in the first place. It seems logical to me that if Sun isn't going to use Ancor's switches, and will instead either develop their own or use Brocade's SilkWorm, that they might want to return their MKII's. That certainly isn't a given, but it is a possibility. The best scenario (your #1) is that Ancor would own the product, it has not been counted as revenue, and therefore there will be no charge back. That is clearly the most desirable situation because Ancor could get back what is left of their intellectual property without any financial impact. This is the best scenario, but I think it is unlikely. If Sun actually owns the product, and bought it for their own internal testing, as opposed to reselling it to customers, I don't see how they could legitimately return it. In this scenario, the financial impact to Ancor going forward should be zero. I have a hunch that Sun had more than just 1 or 2 switches. I would guess closer to 6. (This is based on my opinion that Sun was developing products that would scale higher than 1 or 2 switches would allow.) I think your 3rd possibility is extremely unlikely. Once again, I don't KNOW for a fact what the aftermath of Sun will be. I'm just playing it safe, and hoping for the best. I am still cautiously bullish on ANCR, especially long term, but I'd like to know a few more details about what happened with Sun, and what is going on with the overall FC market. Unfortunately, I don't think those details will be forthcoming until the conference call. Ancor still needs to sign that first big OEM. Then, a lot of our discussions would seem (and be) a lot less important. Craig