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Technology Stocks : Ampex Corporation (AEXCA) -- Ignore unavailable to you. Want to Upgrade?

To: Hal Campbell who wrote (4186)	12/27/1998 6:10:00 PM
From: Gus	Read Replies (1) \| Respond to of 17679

Good summary, Hal. Let me just add that after the contingent deals with Maxtor (1996) and Samsung (1997), it finally came down to IBM and Seagate, as referenced in the SEC filings. IBM wanted to punt KM to the era of perpendicular recording. With density gains coming out of the wazoo, IBM's interest was in the use of KM's ability to mitigate the effects of thermal decay. But despite decades of basic research -- most of which has been centered in Japan -- there has been no spinstand demo yet by the perpendicular recording crowd and that has typically been the milestone required before any practical time-to-market estimates can be overlaid. Seagate also wanted to put KM in play in its R&D labs but SEG didn't want to pay royalties. Ever. Their thinking was that if and when they decide to use KM, it would become an industry standard and Ampex would then be able to make money out of the others. I doubt if we'll ever get the full account of what actually happened, but we do know that after taking everything into consideration, including the $6-7 million that AXC has spent since 1994 to commercialize KM, Bramson decided to complete the developmental work -- KM+MR/GMR, channel electronics and head redesigns -- and put the KM program (and the entire Disk drive components Division) on ice. Since then, there have been sightings of perpendicular recording versions of KM being used in the R&D labs of NEC and Fujitsu, but not much else. Speaking only for myself, I put the net present value of an outside chance in the perpendicular recording era as O. If one stops to think more about it, however, AXC spent $6-7 million to commercialize a technology whose tangible prospects were enough to add several hundred million dollars worth of market cap to the company. But, see, the thing is the KM program represented just one component technology that AXC unbundled from just one track of its R&D efforts over the years. The cash flow would sure have been nice, but as I have said many times before, I believe the crown jewels of Ampex lie in its heritage and expertise in moving pictures and sound. We respond very powerfully and attach very rich meaning to moving pictures and sound in business and in our personal lives , and that is an asset that can only prove more valuable as computing evolves along the "intensely visual computing" vision of Andy Grove or the "intensely immersive computing" vision shared by futurists. In the early nineties, Bramson's instincts about the trend towards client/server and the explosive growth of storage were right on, but he developed a proprietary storage product (DST) that was either too advanced or too expensive for the market. It is fair to ask, as we wait agonizingly for his web strategy to unfold, if he has learned his lessons well.