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

To: Torben Noerup Nielsen who wrote (3053)	7/22/1998 6:50:00 PM
From: James McMahon Jr.	Read Replies (4) \| Respond to of 5944

I always thought, and in hindsight it has been been proven many times, that the best time to invest in a downtrodden stock was when the news just couldn't realistically get any worst.Well, we certainly have gotten plenty of bad news lately and the recent resignations have just added fuel to the fire. My question to the group is, can this company turn around or is an investment in Adaptec the equivalent of an investment in a buggy-whip manufacturer when cars came on the scene? Or is the typewriter analogy more appropriate? In either case, will we just have to wait and see if scsi will die fast or slow, or if Adaptec has a viable way to generate the vast sums of money they made on the aforementioned technology, or maybe we just sit in the stock nether-world, neither up nor down....this is my first post, go easy on a newbie!

To: Torben Noerup Nielsen who wrote (3053)	9/18/1998 2:07:00 PM
From: The Philosopher	Read Replies (2) \| Respond to of 5944

Am digging out an old Torben message hoping he will come back for a few comments. Listened to the conference call. Much better on replay -- could pause it to write comments as I went along. Very interesting stuff, but I want some comments from technically knowledgable (Torben--you there?) to see whether it makes sense. Forgive any technical misstatements; I'm not a techo person! Some of what I got out of it: The basic strategy is to focus on making money now. "The best way to make money tomorrow is to make money today." They are changing the way they are playing the game, had too many irons in too many fires and were unfocussed; will regain focus. I/O has many opportunities, but they were following too many. Some of their main comments: 1. Their main SCSI focus is not on desktop market, but on internal server connections. Desktop (channel market) has dropped from 50% of SCSI business to 30%. This is primarily peripherals, not disk drives, and they think they will continue to hold that peripheral market. (This didn't come up, but I think this is their answer to the sub-$1000 PC question; that's not the market they are looking to make money from.) 2. They think SCSI is still the only, or at least the primary, game in town for internal server connections. They believe SCSI, for internal server connections, is not going away. They say SCSI-3 (Ultra 160?) is twice as fast as Fiber Channel and has backward compatibality. The claim they own the internal server connection market, that there is no real pricing pressure, and they plan to continue to own that market. They see server growth of 15% a year, and plan to grow at least that much. 3. They "spun off" three areas because they were not producing immediate revenues, and were eating resources. Their plan is to keep their investment in the businesses through maintaining equity positions, but let the financing to complete the technologies come from other sources, releasing their cash for other purposes. These three are Satellite networking ("we own the market," but the market doesn't yet exist, and will be 2 years before significant revenues) which will go to Broad Logic; External storage, which will go to Chaparelle (I don't know the exact spellings because it was all voice only), and Fiber Channel. They realized Fiber Channel was controversial, but Jaycor Networks is the only company making money off fiber channel, and it needs several developments to take place before it can grow; NT 5, clustering, and storage area networks. They said it is a long way into the future. 4. The software division, including RAID, is one off their highest priorities. They have the highest performance available, and will be a leader. They are also a world leader in CD recordable software. This stuff requires higher performance drives, so by growing this high end software business they are also growing their high end disk drive SCSI market. In response to questions, these were a few answers: -- reiterated that their base market is SCSI for servers, which is not going away. "We own the internal disk connection market." -- the search for new CFO and CEO not really started yet; Bouchier has committed to board to stay for 9 months, is concentrating on putting things back on track before starting headhunting. -- they have used all the money the board authorized for stock buy-backs. Will have to get further authorization before they can buy more back, but Bouchier wants to because he thinks at this price it's a strong buy. -- Revenues of $140-145 million this quarter are expected to be the lowest they will go, will start increasing from here out. The basic financial model will be as it was in the past. -- SCSI-2 is only 10% of SCSI sales (surprise to me!), and will grow. They have higher asp (what's that, anybody? not a term I know, but seems to be either revenues per unit or profit margin connected), so will add more to bottom line in future quarters. -- RAID will be winning business "real soon." It's a 64 bit solution, uses the code base from Data Kinesis, which they acquired some time ago. All independent views say their RAID is the best of class. -- Several times Bouchier emphasized that what they were focussing on is what drops to the bottom line. -- NT5 will really make a difference. Due out mid-next year (knowing Microsoft, that probably means in 2003!) They called it the first generation of serious centralized server ability; they claim that the internal disk connections will continue to be SCSI, with SCSI 160 right in the middle of it. NT5 will also drive external connections; 160 can do this, but not its forte. 160 will be released in the same time frame as NT5. -- the three spinoffs will have negligible impact on revenues -- together they constituted less than 5% of revenues. (Which is why they are dumping them! Too much cost, not enough revenue!) Those are the main points from my notes. I have no idea whether they are talking sense or blowing hot air, particularly on SCSI continuing as the main internal server connection, which if they're wrong about will be a major problem since it is a main assumption of their plans. Any other comments, anyone?