Replies to post #53102 on Zeev's Turnips Patch-No Politics (ZEEV)

[goodluck]

Drive maker Seagate plans IPO next week
By Dawn Kawamoto
Staff Writer, CNET News.com
December 6, 2002, 12:06 PM PT

Disk-drive maker Seagate Technology is expected to step back into the public markets as early as Wednesday, but portfolio managers are still mixed on the attractiveness of the deal.
Seagate's initial public offering is expected to raise $1.08 billion, based on the high side of its $13 to $15 per-share pricing range. But the company could receive only $317 million of the proceeds--with the remainder largely going to the buyout companies that took the company private and to the management group.
And that ratio rubs one portfolio manager the wrong way.

"Fundamentally, Seagate is a good story. But the financial arrangements of the deal I find repellent," the manager said. "The buyout firms are making too much money on the deal...I don't see a lot of money going back to the company. The IPO doesn't do anything of significance for the company itself."

This particular fund manager also said that the "huge" number of potential shares to flood the market once Seagate's lock-up expires is also a concern. A lock-up period prevents company insiders from selling shares--typically for 180 days after the IPO. But once the lock-up expires and insiders sell portions of their holdings, downward pressure is often put on the share price. In Seagate's case, the number of shares that will be available after the lock-up expires is nearly five times the number that will be offered in the IPO.

"I won't touch this deal with a 10-foot pole," said the portfolio manager.

But another major portfolio manager said the tough market in which Seagate competes is more troubling than the potential effects of the financial arrangements of the deal.

"Seagate's management is credible and experienced, but I think they are operating in one of the most volatile segments of the tech industry," said the portfolio manager, who has not yet decided whether to invest in the offering.

The industry has been plagued by intense competition and slim profit margins. But Seagate's fundamentals are strong, portfolio managers note. Seagate is better positioned in the industry because it's independent and does not compete with its customers, unlike companies such as Hitachi, said a portfolio manager.

And, the manager noted, because Seagate runs its own research and development for its drive heads and media, it is not dependant on third-party partners to keep up with the technology curve, which isn't the case for competitors such as Western Digital.

During the quarter ended Sept. 27, Seagate generated $1.58 billion in revenues, up from $1.29 billion a year ago. And the company's net income rose to $1.10 a share, compared with 34 cents in the year-ago period. But when accounting for the recent sale of its XIOtech, Seagate's pro forma results for the quarter showed revenues of $1.56 billion and net income of 29 cents.

Despite Seagate's ability to post a profit in the recent quarter while some of its rivals, such as Maxtor, lost money, one portfolio manager noted Seagate's valuation based on its IPO range is running high.

The company, which was taken private in 2000, is expected to set a specific price for its shares Tuesday and begin trading Wednesday under the symbol STX.

http://news.com.com/2100-1001-976391.html?tag=fd_nbs_ent

[lurqer]

preliminary "road map"

Thanks for sharing. Surprising amount of structure. I understand that it is provisional and subject to change as events unfold.

Thanks again.

lurqer

[chainik]

Zeev,

Thanks for your preliminary road map; as always useful.

Two questions/comments:

First, I feel uncomfortable with the first part of your map (1619 by 1/15/03). IMO it makes too much sense and, again IMO, it is too close to consensus (George Cole raised similar question). At least I read a number of similar forcasts - made by both smart and not so smart people. I would feel much better abot this target if we drop significantly lower within a week or two. Does it make any sense to you?

Second, I share your opinion that nasdaq will reach another bottom (my bet is 800) in the second half of 03. For those of us who are pessimistic and lazy, why not to buy gold miners and do nothing for half a year? Nasdaq 900 should be accompanied by a weak dollar and panic. Gold should do OK. Another way to ask the question: are you still negative on gold?

[jrintl]

This doesn't give you pause on the 1619 scenario? What are odds (if any) of lower high (than 1520) and then your 2003 scenario? (starting from a lower high in Jan- all numbers adjusted downward, but same rhythm)

http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=18310663

[Mustache Pete]

Zeev, Turnipville is an anomic community. Hundreds visit. Most remain voiceless. Discourse is dominated by a strikingly unrepresentative handful. Older gentlemen, retired or semiretired, monied, just playin' the market. It goes unmentioned that the vast majority either hold jobs or are not primarily daytraders.

You are an endearing character, something of a patron saint to the pokey and unwashed small investor. But there are two of you, my friend. The patient, principled scientist and that gonzo Doppelganger-serial abuser of the edit window who posts nothing but breathless paeans to madflipper buccaneering. Plainly, in my view, the wrong cat is kept locked in the attic during business hours.

This is Saturday. The betting windows are closed. The "Die, Emulex, die" crowd is not around. Thank you for the roughcut of your first half, 2003 forecast. Among those who go on record every day, publicly, in an interactive forum, you are the very best.

Say. Hold it. Wait up. Did you slip an edit in there? Politely? Way down at the bottom of the page? Can only mean that you are proud of the work behind your model.

aldaka

[Sir Realist]

Wow, Zeev. Over a multi-month period, that's the largest collection of peaks and valleys I can recall you making within a 6 month window.

My models have largely been based on technical and historical patterns, adjusted for economic data as it comes in. I've gathered, from your observations over the past few years, that your models factor in some macro-econodata, based on your considerably longer experience with the stockmarkets.

I don't want to be presumptuous and ask you to reveal the formula of the larger models you've constructed with such a large degree of success. But I retain a high respect for your perceptions and skills, and do have a few specific questions.

-- Of the macro economic data, nationally or globally, are there a few that stand out as the most critical that you feel all traders/investors should pay close attention to?

-- Since a great amount of economic data reflects what just happened, as opposed to what will happen, are there any reliable forecasters that merit extra attention, such as a particular central bank or economic school of thought that are worth studying the pronouncements thereof?

-- Considering the shift from a mostly industrial based economy to a services/IT economy (with a substantial farming out of the old industrial sector to other countries, certain data seemingly becomes less relevant, such as this: http://www.economagic.com/gif/g1202240128021919193641974840784.gif
and this:
http://www.economagic.com/gif/g1202240128021857536454064403772.gif
and this:
http://www.economagic.com/gif/g120224012802190957364574505840539.gif
Is there some substantive way to project such usage? Is it based more on population growth than type of economy?

--What stimuli do you see causing so many peaks and valleys within the next six months? The Middle East/Iraq? Elliot waves?

Thanks for any insights you can provide. Btw, my nominal dates for the 1600+ peak is 1/30 and for the mid-2003 low, it's 6/24, so our different methods are not significantly far apart on those two key points.

-Kevin