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

To: Larry J. who wrote (2331)	5/20/1998 8:16:00 AM
From: jgercke	Read Replies (2) \| Respond to of 5944

Larry, I speak here as someone who had a large position in ADPT which I sold the morning after earnings were released. My decision to sell wasn't based on the current quarter's results, but on what I felt was an uninspiring conference call: not overly pessimistic but suggestive that short term results for the company were problematic and essentially outside of company control. The company's traditional markets are weak and subject to forces outside management's control, and new markets being developed are uncertain as to timing and congruence with historical profitability parameters. My earlier point about meeting reduced estimates relates to valuing the company. I agree that meeting estimates is better than missing them, and can be an important step in restoring investor confidence, but meeting estimates begs the key question of an appropriate valuation for the company, which has more to do with outlying prospects than the current quarter. I am having trouble determining the potential reward for investing in this company, which obviously creates problems for analyzing a reward/risk scenario. I agree that if all variables were resolved concerning the future, the market would incorporate certainty about the future and the share price would reflect same (up or down!). My point was that some companies have clearly defined roadmaps and uncertainty relates to execution, not broad strategic issues. In ADPT's case I am not able to clearly extrapolate their various initiatives (which I generally think are good) into a operating model that I can evaluate. This of course is my problem, but I would like to be able to sit back and say to myself "Aha, I see that this company can make $2.50 a share (or whatever) if this and that happens." That would leave me in the position of rating execution issues and arriving at appropriate valuations, not trying to cope with fuzzier strategic ones and wondering whether new markets will produce results consistent with the company's prior operations. I concur that some kind of opportunity lurks among all this uncertainty, just not certain what to make of it all at this point, thus I sit on my hands. jg