S.A. Advisory E-Mail Update
July 13, 2000
Special S.A.Advisory alert for July 13,00 Dear e-mailer's http://wwww.saadvisory.com If you wish to delete yourself from our list---visit http://wwww.saadvisory.com/update and scroll the "add" so delete falls and then add you e-mail and then send--you will be removed. We have not been paid by any of the listed securities within this message. We may sell any listed security at any time. On April 26, 00(e-mail message) we mentioned, " coms looks attractive @ current levels $39.00---As of today ( July 12,00 coms-$64------( 3Com corp) We recommend investors sell total position and buy comsv ( 3Com corp's "stub") When the palm pilot shares are spun off to shareholders-the remaining company is currently trading as "when issued basis". Each 3Com share gets around 1.5sh of Palm stock when distribution occurs on July 27,00. The parent company will then only have the core networking business and $3 billion in cash!!! It is the Palm-less 3Com (comsv-nasdaq symbol--current price $13.75) that looks extremely attractive. The balance-sheet will be super-clean featuring over $3 billion in cash, or roughly $9.00 a share based on 3Com's 350 million outstanding shares. When you consider the amount of cash/sh, investors are paying little for its core operation. It's true that major chunks of 3Com's business are in decline, including network interface cards, but it does have some emerging businesses, like broadband and home-networking products, that are showing strong growth. Food for thought: At $20 (comsv) 3Com would be trading at around one times estimated fiscal 2001 sales of $3.4 billion, before factoring in the cash on its balance sheet. No networking company has such a low valuation. Cabletron Systems, a weaker networking outfit, commands around 3X sales.. It is believed that 3Com will initiate a $1 billion stock-buyback program after the Palm spinoff, which could also boost its share price.. Finally, a company with such a large pool of cash--the possible acquisitions could transform 3Com into a "new" and rapidly growing company..We rate the "new" 3Com (comsv) stub with a strong buy recommendation. We intend to monitor comsv for % gain performance.. ANOTHER RECOMMENDATION!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! SGI----engaged in high-performance computing, powerful servers, supercomputers and visual workstations. book value--around $6.75 cash--$2.09 little debt does over $2.5 billion in sales PROBLEM----TURNING A PROFIT.. On July 11, 00 SGI announced preliminary 4th quarter results--losses continue, but book to bill ratio looks positive. At the current price of $4.00- if you substract out the cash ($2.00) you get the whole company for $2.00 plus extra $2.75 in book!!!! At current levels--we believe that this stock (sgi) is an excellent speculation for the risk-taker!! At present 13 brokerage firms have rate sgi with a HOLD!! They have NO BALLS! We rate SGI with a SPECULATIVE BUY! See press June 26,23,19, 12 & May 23,22 00. OTHER STUFF!!!! NCE-PETROFUND--GREAT YIELD 25%, OIL AND GAS ROYALTY TRUST,TAX DEFERRED,GREAT RESERVE GROWTH. SYMBOL---NCF U.TO (TORONTO EXCHANGE) SEE JUNE 28,00 E-MAIL ALERT FROM S.A.ADVISORY FOR COMPLETE DETAILS. MONTHLY DIVIDENDS--LATEST .11cd$ OR .075 us$---We believe that this trust offers a great yield and excellent upside potential--most production not hedged!!! (OIL 55%-GAS 45%) OTHER BUYS!!!! FRTI,HMLD, PER, SAFC, TEX,UNM,WCOM,XRX,NEM(@$20 not much risk for this great gold company), FCIN Happy Investing William Velmer Hard copy newsletter will be out soon!!