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

To: George Dawson who wrote (17553)	8/1/1998 12:40:00 PM
From: Craig Stevenson	Read Replies (1) \| Respond to of 29386

George, We have been REPEATEDLY warned about ANCR's steady decline, by Ed Doell, Craig Crawford, Ed Schultz, etc., but I have stated all along that at SOME POINT, the market capitalization goes from being overvalued to being undervalued. Based mostly on Roy's revelation about Arcxel being worth $40 million, it seems to me that Ancor must be worth more than that. I don't know much about Arcxel, but I seriously doubt that they could have had any substantial revenues at the time they were purchased by Vixel. And if Roy's comment about the prototype nature of their switch was accurate, they didn't even have a production-ready product at the time. This also factors into my belief that the current stock price does not reflect the true value of the company. Even in a buyout situation, I seriously doubt that ANCR wouldn't garner a significant premium to its current market cap. Another point that I've never brought up is that the closer we get to widespread Fibre Channel adoption and implementation, the MORE valuable FC technology should become. I am also somewhat encouraged by the fact that we HAVEN'T heard about any more OEM announcements from Brocade, and the news that Bruce B. was gone really surprised me. I think Ken made the statement during the conference call that most of the business has yet to be awarded. All things considered, it makes me think that Ancor might have a chance yet. I agree with earlier posts that the financing is the key to Ancor's survival. Once we get beyond that point, we can start focusing on the OEMs again. Of course, the reverse is also true. The signing of a significant OEM BEFORE their cash runs dry (I estimate another quarter or maybe two) would virtually guarantee a good financing deal, along with a substantial rise in the stock price. At this point in time, given the current stock price and some real signs of growth in the Fibre Channel market, I think a good case can be made for ANCR as a speculative investment. Those of us that are in at higher prices are already in cash, so there is no real pressure for us to sell anymore, especially since the downside risk is exactly $1 1/4. I think Ancor has to be looked at with both a long and short term view. In the short term (1-2 quarters), I look for signs that the SAN market has been accurately assessed by Ancor, and that the MKII has all of the features necessary to compete effectively in that market. I also want to see some additional products. On my list are an 8-port switch and the Fibre Channel to Ethernet gateway product. I also look for word about some sort of bridge financing, to get them through another year, and/or the signing of a significant OEM. If we get most, or all of those things, I think a long term view can then be taken. That would consist of continuing OEM deals, a broadening product line, and additional enhancements to existing products. It seems like we are starting all over, and perhaps in a sense we are. The difference this time is that we have a VERY reasonable market cap and NO HYPE. A tremendous amount of bad news is factored into the stock price. Ancor still has to deliver, but if they do, I think the price will move up quickly to a more realistic level. There are a LOT of investors that are simply waiting for any sign that Ancor has gotten things together. Craig