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Technology Stocks : Seagate Technology - Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Alan Casey who wrote (385)	12/22/1998 12:12:00 PM
From: Robert Douglas	Read Replies (1) \| Respond to of 1989

Question: Why would SEG not provide the funds itself? It has the capacity, I don't think having Dragon as a public co. will significantly enhance SEG's market valuation (not big enough a deal). Am I missing something ? Certainly Seagate has the resources to fund any needs that Dragon may have. I can think of 2 reasons that Dragon wouldn't approach SEG for capital requirements. First, maybe they don't want SEG to get too big a portion of their shares. Second, in a silly market like we have today [see Internet stocks], the allure of becoming a market darling and having a market where the founders can sell grossly inflated shares is appealing. I am sure that any good investment banker worth her salt has mentioned this to the folks at Dragon. If it is a $100 million deal, it is likely that the total market value will be in the one-half to one billion dollar range. Assuming that the deal places between 10%-20% of the outstanding shares [very typical]. Since SEG will still own a diluted share of about one-third of Dragon, it follows that this will reveal SEG's value in Dragon at between $2-4/ share. Of course I'm just guessing mind you. We will have to wait for details on the offering. I just ordered Dragon Naturally Speaking for myself. -Robert