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Technology Stocks : Ampex Corporation (AEXCA) -- Ignore unavailable to you. Want to Upgrade?

To: Hal Campbell who wrote (3059)	7/27/1998 6:39:00 AM
From: Gus	Respond to of 17679

Geist left out the need for analgesics and antacids... ...and bandages for those porcupine wounds. LOL. Great summary, Hal. Yes, KM was the proverbial cash cow that could have allowed AXC do more things with its mixed-signal (analog-digital) crown jewels had it been successful. Now, AXC has to improvise and acquire companies that will allow its revenues and profits to grow at a faster clip. It is clear that they are targeting some emerging markets (SAN-storage area networks, NAS-network attached storage, web hosting) that will be growing at explosive rates. That may be the easy part. Participating vigorously in those fast-growing markets is going to require some deft execution on AXC's part. And, like it or not, we are the jury in that process. I also agree that this one is going to take some time which probably means that a process of scaling in (or scaling out) of the stock depending on developments may be the most prudent way to handle this porcupine. Gus Some random notes... 1) EMASS was sold to ADIC last July 21 for $25 million in cash the assumption of $2.0 million in mortgage debt. Did AXC bid for this puppy? If no, why not? Most of you will recall that EMASS, Odetics and AXC were the members of the trio that developed the DST line in the early nineties. EMASS provided the system integration and firmware expertise, Odetics provided the automation technology, and Ampex provided the D2 tape drive technology. Because enterprise storage is a hot sector that will get hotter with the intro of more bandwidth in the networks, I think it's useful to lay out some kind of backgrounder to help us make successful investments in other companies in this sector. EMASS later abandoned Odetics' automation technology when they purchased Grau, the German systems integrator, in 1993 or 1994. EMASS used to be a division of E-Systems, a major defense electronics contractor based in Texas, until it was sold to Raytheon as part of the consolidation of the defense industry. EMASS has what is probably the most sophisticated robotics for mixed media libraries -- based on modules that can handle most major tape drives, CD and magneto-optical drives. Most recently, AXC used EMASS robotics to sell a library with 10 DST tape drives to a supercomputing center in Germany. Odetics (ODETA and ODETB) span off its library division, ATLPA, last year, I think, while retaining control over the key pieces of the patent portfolio protecting its automation technology. (N.B. Early this year, Odetics won a major patent infringement case against Storagetek) QNTM recently purchased ATLPA ($100 million in revenues) for $300 million in QNTM stock. One odd thing about Odetics. It controls the niche for time-lapse VCRs which is used by security offices all over the world for surveillance and security purposes. Do they pay royalties to AXC? Or do did AXC exchange perpetual royalty rights with Odetics (automation tech for VCR tech) similar to the way that Ampex exchanged rights with RCA -- color tv tech for VCR tech -- in the a-go-go sixties? 2) Keep an eye out for the SEG Software spinoff later this year or early next year. $320 in revenues. Two competitors with premium valuations are VRTS and LGTO. Check out the relative valuations. SEG Software is better positioned in Windows NT while VRTS and LGTO have stronger competitive positions in UNIX and the mainframe space. 3) In the WYSIWYG category, Applied Magnetics is making 2.1 GB TFI heads at the behest of Samsung.