George,
I'll take a stab at some of the Yahoo information:
1. Regarding the S-3, I do agree that the Reg D conversions are largely responsible for the current stock price.
2. An OEM deal is what all of us have been waiting for. If Ancor indeed has one, then the announcement of it will go a long way toward restoring investor confidence. As far as I am concerned, this is the key point.
3. I certainly agree regarding the talent on the engineering team. The sales team has yet to prove their mettle. $100,000 quarters don't count. <g> Of course, this doesn't mean that the sales team hasn't delivered anything, but it certainly hasn't hit the news wires or the top and bottom lines yet.
4. I agree that Ancor has some good employees. The lack of attrition is further evidence of that. Even more interesting to me is that Adaptec and Brocade appear to be laying off people, while Ancor is staying the course.
5. Economic slowdown (and/or the Y2K problem). I have begun to believe that Fibre Channel may be one area that is somewhat immune to these problems. It seems to me that the areas that need Fibre Channel have not been, and likely will not be affected as much by an economic slowdown. Data storage needs continue to climb, no matter what the economy is doing. Further, the Y2K problem will force legacy hardware/software replacement. Anticipation of future storage demands should actually help the Fibre Channel market, since new hardware installed to meet future needs will likely have Fibre Channel capability.
6. Financing. I'm not sure what form the financing might take, but something that does not add to the dilution would certainly be desirable. An equity investment by an OEM would also increase investor confidence, not only through the cash infusion which would ensure continued viability, but also by the association of a (hopefully) big name attached to the deal.
7. Viability/Profitability. I do not believe that Ancor will go under. Their technology is simply too valuable. The longer they can hold out, the more valuable their technology becomes, because the Fibre Channel market continues to mature. The recent Boeing contract announcement extends the time that Ancor can stay afloat. Without an OEM, there doesn't appear to be any way that Ancor reaches profitability anytime soon. I could be mistaken, but I don't think Ancor has EVER posted a profitable quarter. (At least not in recent memory.) I'm glad that Ancor management is confident about becoming profitable at some point, but I'm still waiting for Cal to "show you the numbers".
8. Insider buying. There has been a continuing display of insider confidence in the company at all price levels. This is probably the most consistent indicator that we have. Insiders may not have another window of opportunity to buy until after the next conference call, however.
<<Apparently, he said, a lot of people on the boards are very naive about what is really going on. While many have solid technical expertise, we do not have a clue as to what is really happening on the business side. Granted, Ancor is keeping a tight lid on all this, but they would prefer that we not speculate so much and spread rumors that are just not true.>>
It is quite true that we are naive about what is really going on. I had no clue that Ancor would post revenues of $137,000, yielding a $7.3 Million dollar loss (.63 per share) in the latest quarter. I had no idea that Hucom was in trouble, and wasn't paying their bills. I had no idea that they would write off $4.4 Million dollars of inventory. What does Cal expect?
As far as rumor spreading, the SI board has been VERY good at attempting to track down EVERY rumor, and either confirming or refuting it. Granted, we have been much more successful at doing that on the technical issues, but we have made an honest attempt to do so on all issues. The other problem is that in the past, some of these rumors HAVE BEEN TRUE, despite repeated denials from Ancor. (Sequent, for example.) It is foolish to totally dismiss all rumors, just because they aren't confirmed by the company. The lack of substantive information directly from Ancor exacerbates this problem.
<<Dissuading them from holding their position, and thus adding to a downward spiral.>>
The alternative is to hold and go broke. Some of the long term ANCR holders (like myself) are absolutely petrified to see the quarterly numbers, because we have no idea what unforeseen disasters have occurred during the quarter. Again, what does Cal expect? Investor confidence will not be fully restored until these unexpected catastrophies are eliminated, and consistent revenue and earnings growth are achieved. And further, I did NOT sell any shares following the last conference call, and have NOT contributed to the downward spiral. (I was certainly angry enough about the numbers to have sold everything, and washed my hands of the whole situation, but I didn't.) I also think the S-3 proves pretty conclusively where the selling pressure was coming from, and I don't think any of the regular SI guys were part of the Reg D deal. Another point is that once ANCR fell below $3, and all of us were in cash, it didn't make as much sense to sell.
<<On the other side of the coin, speculation on the board can sometimes have the opposite effect (i.e. speculation about the SUN deal).>>
Once again, if Cal & company had ACTUALLY READ the posts on SI during that time, they would have found many of us trying to tone down the Sun speculation, since we could find no corroborating evidence.
As to the future, I believe that Fibre Channel will finally reach critical mass in 1999. I also believe that Fibre Channel OEM announcements will occur in the second half of 1998, and all through 1999. Most importantly, I believe that Ancor will get some of those OEMs, but at this point, I am tempted to believe Bullstroke when he says that most of them will go to Brocade. Another key to boosting investor confidence is to PROVE BULLSTROKE (and the rest of the rumor mongers) WRONG!
There are simply too many inconsistencies surrounding Ancor for me to think that they will ultimately fail. The combination of an emerging Fibre Channel market, a collection of good engineers, a capable switch, a highly regarded sales team, virtually zero attrition, and continued insider buying makes me think that something good is going on at Ancor. We just don't know what it is, yet.
Craig |
