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

To: Lhn5 who wrote (18197)	9/25/1998 9:13:00 AM
From: Craig Stevenson	Respond to of 29386

Larry, <<I am surprised Kinnard didn't see this coming and upgrade the stock days or weeks ago. Wonder what they'll say now?>> I don't see how Kinnard can help but upgrade ANCR. This deal alone should prove that significant revenues (and EARNINGS) are possible. Craig

To: Lhn5 who wrote (18197)	9/25/1998 11:10:00 AM
From: Kerry Lee	Read Replies (1) \| Respond to of 29386

<<I am surprised Kinnard didn't see this coming and upgrade the stock days or weeks ago. Wonder what they'll say now?>> WHY are you surprised? By the time Kinnard upgrades ANCR from HOLD to BUY, Kinnard customers will probably be paying at least twice the price. Here's a back of the napkin/ quick and dirty analysis: Assuming a worst case scenerio of 12 months forward revenue of $12 million ( $9 million GSX + $2 million Boeing AWACS + $1 million miscellaneous LAN sales and zero OEM's )and shares outstanding of 21 million ( I think it will be closer to 16-17 million shares since Series C guys can only convert maximum of 15% per month ), a $2 stock price equates to a total market cap of $42 million or a price-to-sales ratio of 3.5..and that assumes ZERO OEM revenues going forward..It does not require rocket science to conclude that the stock is cheap based on the news that is already in the public domain.In other words,not only is PSR only 3.5 , the current stock price does NOT discount any new business from future OEM wins in a high growth industry sector ( fibre channel ) that is still in its infancy. BTW, with Interop ( late Oct ) and Comdex ( Nov ) around the corner, I would not be surprised to see the FC scene heating up considerably. That means I expect that Brocade, Mcdata and Ancor to announce OEM wins beginning in Q4 1998 and continuing thru 1999. Regarding the reaction of the Market to yesterday's news, I would not be surprised to see an orderly run-up over days/weeks ( eg 2 steps forward, 1 step back ) as opposed to an explosive 1 day gap to $4-6, due to: 1) the likelihood of Reg D guys trying to manipulate/hold down the price short term in order to affect their conversion price ( look at the Series B/C conversion formulas to see what I mean ) 2) more FC/ANCR announcements likely as we get closer to Interop and Comdex in Oct/Nov 3)more industry analysts jumping on board as more news develops and the story gets better..Analysts have visited Ancor in recent months and are waiting for evidence of FC market taking off and/or an OEM deal before initiating coverage of ANCR. I do not know who these people are or the timeframe...could be this year or early 1999. 4) ANCR Mgmt credibility with investors/financial community is not repaired/regained overnight. Once the Street realizes that NEW Mgmt/Sales Personnel are for real, the stock price will follow. The licensing deal is only the first piece of hard evidence. Remember that it took more than 1 day for ANCR stock to drop from $4 to $1..and a sustainable rebound to $5+ is likely to take more than 1-2 days, ESPECIALLY with Reg D guys continuing to convert. I'm not surprised to see the day traders take profits at $2 when they bought recently at $1 - 1.50. As Roger Arquilla would say, that's a percentage gain of 50-100%<g>.