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

To: Joe13579 who wrote (15853)	4/22/1998 12:05:00 PM
From: Douglas Nordgren	Read Replies (1) \| Respond to of 29386

<<...if ANCR and Brocade do not get a following soon, their future does not look good.>> Robt, amen brother. Once again, an "analyst" has got Ancor and Anchor Entertainment mixed up. No respect. fnews.yahoo.com Stock of the Day (Archive) Apr 22, 1998 Dripping with irony, Navarre Corp. is a small company located in New Hope, MN whose stock price has surged from $2.44 to $9.50 in the past few weeks. The sudden move up represents a resurrection, indeed new hope, for this distributor of prerecorded music and computer software. Navarre also operates NetRadio Network, a "webcaster" which it acquired two years ago, apparently explaining why this stock is being swept higher amidst the astonishing ascent of micro-cap Internet stocks in recent weeks. The current mania surrounding Internet stocks bears great similarity to the speculative frenzy in the Spring of 1996, a short-lived frenzy of which Navarre (Nasdaq:NAVR - news) was a part. It was a heady time when names like Presstek (Nasdaq:PRST - news) , IMP (Nasdaq:IMPX - news) and Optical Cable (Nasdaq:OCCF - news) were soaring 300%, 400%, even 500% in the span of a few weeks. Most of them crashed back to earth just as quickly. Some, like Comparator Systems (OTC BB:IDID - news) and Warp 10 Tech. (Nasdaq:WARPF - news) are worth almost nothing now. Others like Nyer Medical (Nasdaq:NYER - news) and Ancor Entertainment (Nasdaq:ANCR - news) collapsed back to their pre-frenzy levels and faded back into obscurity. Navarre followed a similar path then, and it's going for another ride now. The company came public in 1993 at a split-adjusted $3 and traded at $5 prior to its 1996 acquisition of NetRadio. That Spring, Navarre shot up as high as $18. Insider selling by top executives took the wind out of its sails, as did a general unraveling of the micro-cap speculative frenzy that summer. The business also ran into trouble that year, as a slowdown in music sales and losses from the NetRadio operation sent the company into a year-long skid of unprofitability. The company returned to profitability in its fiscal third quarter ended Dec. 1997, thanks to continued growth in its computer software business and a rebound in its music business. The company distributes prerecorded music, software and CD-ROMs to a retailers such as Tower Records and the Good Guys. The company works with a number of independent music labels, so the NetRadio webcasting venture offers a way to give artists on these independent labels greater exposure, and naturally the potential for online sales. So far, NetRadio has been an expensive tool for promotion, resulting in a $1.5 million drag on pre-tax net income for the first nine months of FY97. Even so, the company managed to break back into profitability in Q3 '97, earning 8 cents per share. Sales last year topped $200 million, so it's not as if the company is all hype and no action. But Navarre's core business is music and software distribution, and the Internet part merely plays an unproven, unprofitable supporting role. That doesn't seem to matter much amid the current mania over Internet stocks, though. Anything with a remote connection to online commerce is inspiring a speculative frenzy, especially in illiquid, micro-cap stocks. K-TEL (Nasdaq:KTEL - news) shot up more than 500% in the past week after announcing plans to take its music retailing business online. Other names popping up in this Spring Fling '98 are Platinum Entertainment (Nasdaq:PTET - news) , Image Entertainment (Nasdaq:DISK - news) , 7th Level (Nasdaq:SEVL - news) , and Market Guide (Nasdaq:MARG - news) . And how about this one: ICC Technology (Nasdaq:ICGN - news) makes humidity control systems, but the stock has nearly tripled in the last week since buying a web site developer, Rare Medium. It's important to distinguish between the mania behind the aformentioned stocks and the rally in top-tier online players like America Online (NYSE:AOL - news) and Yahoo! (Nasdaq:YHOO - news) . While there is plenty of debate over valuations for these big companies as well, most of them are quickly growing revenues from online business into the hundreds of millions or billions, and the stocks are very liquid. In contrast, the micro-mania is exploiting stocks with market capitalizations of less than $100 million, float (shares available for trading) of just a few million shares and pre-frenzy daily volume of just a few thousand shares in most cases. These tiny stocks are easily influenced by speculators. In the past week, volume in many of these stocks like Navarre and K-TEL has surged to 100 times normal volume and several times total float. This is not to say Navarre isn't a legitimate business or doesn't hold a promising future. Indeed, its return to profitability and recent distribution deals with several record labels offers new hope for the future. But when a speculative frenzy erupts in a small stock like this, it is frought with danger and is strictly for gamblers, not investors. There are plenty of horror stories from the Spring of '96 when the same sort of mania broke out. Even if you get in when the stock is only half way to its peak, in just a day or two it can be right back down to where it all started, and that's way below where you got in.

To: Joe13579 who wrote (15853)	4/22/1998 12:47:00 PM
From: Louie Liu	Read Replies (1) \| Respond to of 29386

Robert. Please correct me if I am wrong. 1. McData=EMC emc.com 2. McData resells Brocade switches brocade.com However, someone has suggested that Mcdata is developing its own switches. Regards Louie

To: Joe13579 who wrote (15853)	4/22/1998 6:41:00 PM
From: George Dawson	Read Replies (1) \| Respond to of 29386

Robert, Thanks for posting the opinion of the engineer/CEO. I have a few comments: 1. Based on all of the public information we have discussed on McData, EMC, and Brocade - I think the potential big winner here is Brocade. The data.com article on SANs shows that their full (McData/ES-4000)gig switch and their 1/4 (McData/ES-1000) gig switch do not have switching matrix backplanes and therefore probably can't provide the bandwidth necessary to switch heavy traffic. I have posted earlier that only Brocade and Ancor currently have this type of a switch. I located one of my earlier posts (#11197) referring to the McData Enterprise switch - and in that post I was confident that it was three Silkworms. It is interesting that the current EMC device uses two. At any rate EMC is really a storage powerhouse and if the Silkworm is being used they should sell a lot of them. 2. Ancor definitely needs a following. Funding for R & D is crucial. There has been talk about funding to ramp up production if they win an OEM deal, but if Brocade is really working on 2 and 4 gig FC (I would see this as the real meaning of the EMC release) they will have a product line that can be used for both SAN applications and clustering. Those higher speed switches will need major improvements in latency (1/10 the current latency). That will be a very tough product line to compete against. 3. I have previously posted that it seemed like many of the big players were waiting for Ancor to die on the vine. I think the competitive aspects of the FC switch market are being noticed. We all remember what the Silkworm used to cost before the MKII came out. I think that same bottom line will be driving some business decisions on whose FC switch should be used. When the major players are using FC in their storage products - you have to compete. Without Ancor there is no current or forseeable competition. 4. I think that the future looks fairly good for Brocade right now - but to the average investor there is no opportunity to make money. The future for Ancor will look good if they can sign a major deal. Whether Ancor participates or not - I think FC is here to stay for the immediate future - probably until WDM and all optical switching hits the LAN and SAN. The estimates I read say it is 10 years off. All in my opinion, George D.