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

To: jgercke who wrote (2329)	5/19/1998 10:15:00 PM
From: Larry J.	Read Replies (1) \| Respond to of 5944

Is it that exciting that Adaptec will meet reduced estimates? Your damn right it is! For a company that has missed the consensus estimate for two quarters running, (the last one by a 30% margin), with its share price in a veritable nosedive, the number one concern has to be restoring confidence. Its the fear and uncertainty that have been driving the share price lower by the day. There's no better way to regain credibility than to state comfort with the current quarters numbers, reduced or otherwise. For a masterful case history of how to handle this situation properly, look at Ascend after Michael Ashby joined the company as CFO following a couple of missed quarters. He said they'd make the number 3 days after starting. (Closed today 111% from its low.....we should be so lucky) <g> -- target $33.83! You make some very good points. There are still lots more questions than answers, but taking it a step at a time by establishing visibility for the current quarter 2 1/2 months ahead of time is a great start! ADPT management has seen the wrath that Wall Street delivers to companies that fail to meet the Analyst's consensus estimates. They will be making sure that the analysts are properly guided in the future. These guys are motivated (and compensated) big time to get the share price back up. The Symbios deal is key. There is no reason to believe at this time that the justice department would outright nix the deal. While there are few specifics concerning Symbios' earnings, we do know that it adds $600 million or so and will be accretive to ADPT's earnings. As for the product specific issues, I'm somewhat out of my element and will let the debate rage on as to whether SCSI is dead, but from the diligence I have done I believe that SCSI / Ultra SCSI has alot of life left in it and that ADPT is making the strategic moves necessary to transition the company as the market dictates. In the meantime hitting the numbers suits me just fine. If the future prosperity of ADPT was as clearly illuminated as you suggest it should be, you'll pay accordingly for your shares. Larry

To: jgercke who wrote (2329)	5/20/1998 1:10:00 AM
From: Cris	Read Replies (2) \| Respond to of 5944

Reasons to worry about Adaptec's future The 'fantastic management' that built ADPT's great reputation has gone. John Adler, a refugee from Eastern Europe (Hmm... sound like any other CEO that comes to mind?) left last year, and was replaced by Grant Saviers, formerly of Digital. Adler was famous for lines like "Cash is more important than your mother" and "Bad numbers will kill you every time" (from one of the annual reports (95?)). Adaptec used to pass out a copy of an article from Business Week (93?) titled "The Versailles Syndrome" using Borland as an example that when a company builds a 'palace', it's time to sell the stock. The implication was that Adaptec would always have cheap buildings, and high stock prices. Anyone remember the discussion here a while ago about how nice the building in Longmont, CO was? Current ADPT management has gone from huge cash reserves to huge debt. Bet big and you'll win big or lose big, but it's not the conservative Adaptec of the past. Adaptec has been unable to present a compelling message to change the perception that UDMA for the desktop is 'good enough'. 'Good enough' and cheaper will win a significant portion of the time. Since _most_ users can barely use one application at a time, they're unlikely to be multi-tasking enough to find a detectable advantage from SCSI. Adaptec's been working for years on RAID products. What if 1394 and FC don't explode? Cris <Not speaking for anybody else, etc., etc.>

To: jgercke who wrote (2329)	5/20/1998 11:51:00 AM
From: The Philosopher	Read Replies (1) \| Respond to of 5944

Thanks for the post. I agree that it's not all that exciting to see Adaptec meet .20 earnings when their year ago earnings were .51. Qtr-to-qtr earnings down 60% for a company formerly valued as a growth stock explains pretty well the current valuations. If they make .80 for FY 99 (ending 3/31/99) they would need a 25 PE to hold a $20 price. And with this earnings history, why would they merit a 25 PE?? The kicker is Symbios. If that adds even .40 to the bottom line and they make .20 per quarter off ongoing operations, we're at $1.20 and you only need a 17 PE to achieve $20. And one then hopes that there's more earnings potential both with Symbios and with new products coming along (Firewire products for example) plus maybe Symbios will be producing more than .40 even after interest charges on the debt to buy it. And do they sell the fabs, taking a hit on earnings for more cash to pay down the borrowing? Lots of questions, which is probably why the funds aren't buying, but also some opportunities. If Symbios doesn't go through, I sincerely hope they use their cash to buy back a LOT of stock at under $20. $300 million would buy back 15 million shares at $20, which would be 13% of about 115 million shares outstanding (if they could get them at an average of $18 they could buy back nearly 17 million shares or close to 15%.) This would give an instant boost to per-share earnings, even taking into account lost interest on the cash, and would generate excitement in the stock, flushing out many of the most negative shareholders glad to get out at $18 or 20. Basically, they have options and opportunities--they're still making money, they still have viable products, they're still working in a growing market, they still have a solid name well known for top technology. One has to hope that management knows what it's doing.