Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : PairGain Technologies -- Ignore unavailable to you. Want to Upgrade?

To: Gary Korn who wrote (27222)	11/19/1998 11:54:00 PM
From: P314159d	Read Replies (2) \| Respond to of 36349

MY COMMENTS: KARL, CAN WE MOVE ALONG? PLEASE EVERYONE READ THIS POST IF YOU HAVE EVERY THOUGHT ABOUT OWNING THIS STOCK OR HAVE BOUGHT (AS I). THIS IS ABOUT MGMT WHO CARES. IT IS IN RESPONSE TO MY EMAIL TWO DAYS AGO WHEN THE BITTERNESS AROSE. TAKE CARE, PIED HI JAY YOU WILL WIN IN '99, DOUBLE UP Subj.: Apology Date: 11/19/98 8:28:22 PM Central Standard Time From: chuck_strauch@pairgain.com (Chuck Strauch) To: {delete} Hi Folks I will try to put to rest the concerns addressed in your email - one of several we received on the same subject. My apologies for a somewhat 'generic' reply. There really isn't the time to answer each issue in each email so I will attempt to answer everyone by covering these points: 1) I'll start with the one point each of you want most to hear: we truly do understand that internet 'boards' provide a useful purpose and are certainly a "serious forum" for some investors. My reply to one of our investors - who chose to post that reply on the "net" - unfortunately included a poor choice of words implying that all of the investors who are using chat rooms are not serious. I apologize to each of you for my poor choice of words. My response would have been better worded had it said "these forums are not an appropriate means for company officials to communicate a corporate perspective." 2) Let's use this email to correct the record. This is not about what forum any of you choose as a source for your information on our company nor is it any of our business what forum you use. This is not about our "being offended"; "insulting people's intelligence"; "bashing", "turning our back, or "getting aggressive" with investors; " checking with lawyers"; "lousy investor relations" or any such things. It certainly has nothing to do with our dis-allowing what we write to one investor from being seen by others. It's simply about a common sense fact. Replies to individual investor questions - posted on an internet 'board' - are not an appropriate forum for corporate officials to communicate a corporate perspective. We are concerned about the risk of those replies being taken out of context or inadvertently dignifying the latest unfounded rumor circulating on the internet. We also can't imagine that any investor would want the CEO or the CFO spending their time participating in chat groups - specifically having to respond to the inevitable fallout which arises from our reply to one investor when 15 other investors decide to take issue with what was said in the reply. If the misunderstanding arising out of this exchange of emails doesn't prove that point - then I don't know how better to make it. With all due respect to the investor who decided to post my reply to him - here I am doing the very thing I shouldn't be doing - responding to a bunch of mail from a bunch of concerned investors on a subject which has little to do with getting PairGain back in a growth mode. What we have here is a whole lot of folks worked up over my poor choice of one word - "serious" in a reply to one investor. It is for these reasons - and only these reasons, that neither Charlie nor I will be replying via email to investors who intend to post our replies in the chat rooms. It may come as a surprise to those of you who disagree with this position that there are actually some 'board' participants who only quarreled with the choice of words. They had come to their own conclusions on both the risk and potential counterproductive nature of our participation in a chat room. Some even wondered why we are spending our time answering emails from any shareholder. 3) I don't know of any CEO (or CFO) who is more willing to respond directly to individual shareholder questions and concerns, is more honest and forthright and, in the process, is more willing to take whatever heat any of our investors want to hand out to management. We have a very deep regard for the responsibility we have to all PairGain shareholders - not just in assuring professional, even handed communications but, more important, being accountable to you for the results. Both of us actually enjoy dialog with individual shareholders. We are not a bunch of neanderthal executives ignoring the value of the internet - barricaded behind some personal assistant whose main mission is to protect us from reality. We know that direct contact with individual investors provides a dose of reality which we don't otherwise get from the institutional side. Frankly, there are days when I would much rather spend my time in a chat room with you folks than dealing with the other stuff which comes across my desk. Having said that, it is indeed a shame that Charlie and I have to limit our email communication but do believe that at least some of you will appreciate why. None of this, of course, precludes any of you from reaching us through our corporate communications department. 4) As to the real issues which affect shareholder value, I assure you that we know what they are and are addressing them aggressively. For those of you who haven't read my first response posted on the 'board' by the individual serious investor, it is copied below in order to put the real issues in perspective. We think it provides as candid and clear a response as you could possibly get from any CEO. We also believe - based on our track record since we started the company, that once we get through the current cycle of 60%+/year competitive price reductions in our core business (where the unit volume is still growing at 30%/year!!!!) we will re-emerge as a growing company. Beginning of reprint mentioned in paragraph 4 above: "The answer to your first concern is somewhat complex and requires a lengthy answer. The most likely reason our stock price has "languished" while the "similar" companies to which you refer are increasing their shareholder value is because their revenue and/or EPS are growing and ours is not. As you probably know, our revenue flatness is 100% due to 60%+ annualized price cuts in our core business over the last 15 months by our competitor who has minimal market share - has nothing to lose and everything to gain by targeting our key accounts. The good news is unit volume has increased at a 30%+ rate and the new revenue from our new small subscriber product lines have at least offset the price cuts. In addition, we have dramatically reduced product cost thus preserving our gross margins. The bad news is we are experiencing the downside of a heavily focused company in the technology sector - too many eggs in one basket. A start up company's strength - its focus on introducing a new technology - sometimes turns into its weakness. If the new product introductions don't come on line quick enough, the stock temporarily languishes as the new products take hold." "None of the above should be interpreted as an excuse. These are the hard facts. We always have been concerned that commoditization of our first product to market would occur and had planned to have replacement revenue from our two new product lines. This plan did not materialize. None of this is easy for our management team to accept. We are all major shareholders. I now own 470,000 shares - having recently increased my position. The top management and our board has committed to do whatever it takes - including bringing in new management, to get the company growing again. We are now completely restructuring the company from the top down with the goal to even more aggressively reduce product cost in order to encourage market elasticity in our current products and while diversifying our customer base and product lines - both through acquisition and new product development. With $220 million cash on hand and no debt, we believe we are well positioned to re-instate growth. We still are the dominant leader in all of our market segments and intend to keep it that way." "Having said all of the above, we expect to be measured not on our words but on the results. Only time will tell." "We don't know who the sellers are since investors are never forthcoming on their plans or actions to buy or sell. The transactions aren't reported until 30 to 45 days - well after the shares have changed hands. In the meantime, we have to operate on rumor as to owns our stock in a transition period like today." "We believe that any fund who has taken a strong position in our stock in the last few months is probably counting on the company being sold. We don't know if this applies to AXA. Incidentally, we never have turned away legitimate offers to merge. "As to the buyback and reactions to it and with all due respect to those who think that the stock buybacks are important, I continue to be skeptical about their value. Yes, they are an indication of the management's and board's belief in the company's future. However, the fact that the stock did not "pop" after the announcement of our buyback plan is no surprise to me. It is the fundamentals which count - namely growth in EPS and revenue. Again - this is where we are focused." "I hope this helps. Thanks for your patience which we do think will be rewarded." End of reprint. We hope that this long response will reaffirm to each of you - that we do appreciate knowing your views and accept them as a basis upon which we can hopefully improve communications with all of you as serious investors. Best of luck to all of you. Chuck Chuck Strauch PairGain Technologies, Inc 14402 Franklin Ave Tustin, CA 92780 Phone: 714 730 2895 Fax 505 5175 Email: chuck_strauch@pairgain.com ----------------------- Headers -------------------------------- Return-Path: Received: Thu, 19 Nov 1998 21:28:22 1900 Received: from [199.35.10.19] (gatekeeper.pairgain.com [199.35.10.19]) Thu, 19 Nov 1998 21:28:20 -0500 (EST) From: "Chuck Strauch" To{delete} Subject: Apology Mime-Version: 1.0 Content-Type: text/plain; charset=US-ASCII Content-Transfer-Encoding: quoted-printable Content-Disposition: inline

To: Gary Korn who wrote (27222)	11/20/1998 1:10:00 AM
From: ELFRAM LYEW	Read Replies (2) \| Respond to of 36349

the move started at 11:30 am yesterday. vol. has been high at 9 mil. each day. Today's move may have something to do with WCOM news. But there are must be more than that....... appreciate your thought. Elf

To: Gary Korn who wrote (27222)	11/20/1998 10:23:00 AM
From: Greg Thornton	Respond to of 36349

Gary, I am frustrated as you are, but I think that it is incorrect to say that "any appreciation in the stock price" has quickly evaporated. The move a couple of weeks ago pushed the stock up from the $8 range to $13 5/8, then we traded down to around $10 (net 25% gain) and pretty much held there. This latest move to over $12 has produced a net move to over $11 and will hopefully keep us there. Every week recently the lows have been higher, and that seems to be good technically for us, although I am no expert. I think that the recent moves are not directly attributable to buyout rumors but a natural response to the increase in news about xDSL rollouts. Even that move a couple of weeks ago started out the day with a move from around $8 to $10 3/4. Then people looked for a reason for the move and figured that it must be buyout rumors again and the stock price exploded! I think that the buyout rumors of late have been produced in order to explain the moves and juice them up, but they were not the reason for the initial move in the stock. Just MHO, of course. Greg