To: Jim Switz who wrote (4198 ) 1/6/1999 8:12:00 AM From: Starowl Read Replies (2) | Respond to
Jim: There appear to be some fairly significant differences between Adaptec and QLogic that may account for the variances in their valuations. One is that Adaptec spread itself too thin the last couple of years (since corrected), while QLogic has remained focused. Moreover, Adaptec's primary product line (SCSI) is fairly mature, while QLogic's FC focus is just beginning to come into its own. It seems that most assessments rate FC as a virtual sure thing in the future of I/O connectivity. So, QLogic must be viewed as a leader in that emerging (?) technology. A company believed to be such a future leader can justify the higher P/E. Where trading is concerned, QLogic has far fewer shares available than Adaptec (8.9M vs approx. 110M). The laws of supply and demand have a much greater impact on QLogic's share price, allowing the big increases on no particular news. The same effect would be seen if QLogic failed to meet earnings expectations. But QLogic's earnings growth has been robust over the last year, and we all know about Adaptec's.
