DFAN14A, 2000-05-23
Previous: SIMPSON MANUFACTURING CO INC /CA/, 3, 2000-05-23
Next: ANCOR COMMUNICATIONS INC /MN/, 8-K, 2000-05-23


                            SCHEDULE 14A INFORMATION
                     OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
    Check the appropriate box:
     [ ]   Preliminary Proxy Statement
     [ ]   Confidential, for Use of the Commission only (as permitted by
           Rule 14a-6(e)(2))
     [ ]   Definitive Proxy Statement
     [ ]   Definitive Additional Materials
     [X]   Soliciting Material Under Rule 14a-12

                           ANCOR COMMUNICATIONS, INC.
                (Name of Registrant as Specified in its Charter)

     (Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.
[ ]  $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
     Item 22(a)(2) of Schedule 14A.
[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
     1)     Title of each class of securities to which transaction applies:
     2)     Aggregate number of securities to which transaction applies:
     3)     Per unit price or other underlying value of transaction computed
            pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
            the filing fee is calculated and state how it was determined):
     4)     Proposed maximum aggregate value of transaction:
     5)     Total fee
[ ]  Fee paid previously with preliminary materials.
[ ]  Check box if any part of the fee is offset as provided by Exchange Act Rule
     0-11(a)(2) and identify the filing for which the offsetting fee was paid
     previously. Identify the previous filing by registration statement number,
     or the Form or Schedule and the date of its filing.
     1)     Amount Previously Paid:
     2)     Form, Schedule or Registration Statement No.:
     3)     Filing Party:
     4)     Date Filed:

                       MAY 8, 2000 BY QLOGIC CORPORATION.


                               MONDAY, May 8, 2000

                   [QLOGIC/ANCOR CONFERENCE CALL MAY 8, 2000]

OPERATOR:      Ladies and Gentlemen thank you for standing by. Welcome to the
               QLogic and Ancor conference call. At this time, all participants
               turn listen only mode. Later, we will conduct the question and
               answer session. At that time, if you have a question, you will
               need to press the one and the four on your push button phone. As
               a reminder, this conference is being recorded Monday, May the 8th
               year 2000. I will now like to turn the conference over to Mr. H.
               K. Desai, President, Chairman and Chief Executive Officer of
               QLogic. Please go ahead sir.

H.K DESAI:     Thank you, operator. Good morning, and welcome to this special
               teleconference regarding QLogic's acquisition of Ancor
               Communications. I'm H.K. Desai, Chairman, CEO and President of
               QLogic and with me is Tom Anderson, QLogic's Chief Financial
               Officer. Also joining us today is Ken Hendrickson, Chairman and
               Chief Executive Officer of Ancor Communications, and Ancor's
               Chief Financial Officer, Steve Snyder. I will outline some of the
               major points of our announcement earlier today regarding the
               pending acquisition of Ancor Communications by QLogic, and Ken
               will add some commentary regarding the transaction. At the
               conclusion of these comments we will then open up the line for a
               general question and answer session. During the course of this
               conference call, we may make forward-looking statements regarding
               future events or the financial performance of the company. We
               wish to caution that actual events or results may differ
               materially. We refer you to the documents that QLogic and Ancor
               Communications files with the SEC, specifically the most recent
               10-K and 10-Qs. These documents identify important factors that
               could cause our actual results to differ materially from
               expectations. This conference call report is protected by
               copyright law and international treaties. Unauthorized
               reproduction or distribution of this report or any portion of it
               may result in civil and criminal penalties. Any recording or
               other use or transmission of the text or audio for today's call
               is not


               allowed without the express permission of QLogic and Ancor
               Communications. With that being said, I will continue our
               discussion of this acquisition. Earlier today we announced that
               we entered into an agreement to acquire Ancor Communications,
               Incorporated, in which QLogic will exchange 0.5275 shares of
               common stock for each share of Ancor common stock. Based on the
               closing market price for QLogic of $99.94 as of Friday, May 5,
               2000, the transaction value is approximately $1.7 billion. The
               proposed transaction is intended to qualify as a
               pooling-of-interests and as a tax-free exchange of shares under
               IRS regulations. Completion of the proposed transaction is
               subject to approval of the shareholders of both companies and
               appropriate regulatory clearances. We expect to close this
               transaction in the third calendar quarter. We expect the
               transaction to be neutral to slightly accretive to calendar year
               2001 earnings, as well as, obviously QLogic's fiscal year ended
               March 2002. These forecasts to not include any operational or
               strategic benefits. QLogic is the leading supplier of Fibre
               Channel end-node connectivity solutions for servers,
               workstations, storage subsystems, peripheral devices and
               management controllers. Combined with Ancor's performance
               oriented scaleable switch products, QLogic will be uniquely
               positioned to deliver total SAN solutions to the marketplace.
               Customers will benefit from end-to-end tested SAN solutions, as
               well as faster time-to-market deployments of Fibre Channel
               products. The combination of our two companies will be able to
               provide higher value-added solutions to a broader base of
               customers and channels. I would now like to have Ken briefly
               address Ancor's business and give you his perspective on this
               transaction, Ken?

HENDRICKSON:   Thanks H.K.. As H.K. mentioned, Ancor Communications provides
               high-performance Fibre Channel switches for storage area
               networks. The company's customers include Sun Microsystems, MTI
               Technology Corporation, EMC, Hitachi Data Systems, INRANGE, and
               SAN resellers, including Bell Microproducts. The company was the
               first to deliver a Fibre Channel switch, and the first to top the
               one-gigabit performance level. Through this unique merger, we
               will be able to get access to an expanded customer base with
               complete high-performance, interoperable SAN solutions. The
               combined company's financial and technical resources and
               comprehensive product scope make it second to none in the Fibre
               Channel arena. It is especially noteworthy that the


               combination will allow Ancor and QLogic to accelerate its
               competitive advantages in the SAN marketplace. Importantly, we
               have found strong similarities in company cultures that will aid
               us in making this a very successful partnership. With that being
               said, I will now turn over this teleconference to Tom Anderson,
               QLogic's Chief Financial Officer, Tom?

ANDERSON:      Thanks Ken. When they become available, we urge investors and
               security holders to read QLogic's Registration Statement on Form
               S-4 and the Prospectus/Proxy Statement on QLogic and Ancor
               relating to the merger transaction described below, because they
               will contain important information. When these and other
               documents relating to the transaction are filed with the
               Securities and Exchange Commission, they may be obtained free at
               the SEC's Web Site at You may also obtain each of
               these documents (when they become available) for free from QLogic
               or from Ancor by directing your request to the investor relations
               contacts in the press release issued earlier today. This
               concludes our brief formal comments and now we would like to open
               up the meeting for questions and answers. Operator, please poll
               for any questions.

OPERATOR:      Ladies and Gentleman, if you have a question, please press the
               one or above the four on your push button phone. You will hear a
               three tone prompt acknowledging your requesting. If your question
               has been answered, and you would like to withdraw your request,
               you may do so, by pressing the one followed by the three. If
               you're using a speaker phone today, please pick up your handset
               before entering your request. One moment please for the first
               question. Robert Monigue of Morgan Keegan, please proceed with
               your question or comment.

MONIGUE:       Hi guys, way to go, I wanted to see if you would delineate a
               little more. Both of you have strategic relationships with Sun.
               How do you see this impacting on the added features you can offer
               to Sun as part of this transaction? And also, generally, how you
               will be able to combine the technologies to offer synergies in
               the marketplace, in terms of future benefits to customers?

H.K. DESAI:    We both have a great relationship with Sun and we already talked
               to Sun Micro Systems last night and their response


               was very positive from their management. What synergy we are
               going to provide is that we are going to provide the total SAN
               solutions of products we supplied versus switch product supplying
               by Ancor. So, there is going to be a benefit for the customers.

MONIGUE:       Okay. I assume there is some opportunities at the software layer
               to integrate these together under one management umbrella? Any
               rough feel on the timing of that type of integration? And also,
               has there been any determination made yet on the Sun warrant
               situation that Ancor has had there?

H.K. DESAI:    Bob, let me answer the first question and Tom can answer the
               second one. The software synergy, I mean this is too early to
               determine really the schedule or timeframe, but definitely we'll
               look at the synergies and then see what we can provide, but,
               right now, it's too early to determine that.

ANDERSON:      Yes. And far as the warrant situation, it's a much similar
               answer. It's much too early to determine anything different. We
               did review obviously those agreements in the due diligence

MONIGUE:       Okay. Alright. I'll come back in a minute.

OPERATOR:      Jim Pointer, please proceed with your questions or comments.

JIM POINTER:   Yes. Is there a collar on this exchange or are you going with a
               fixed percentage exchange regardless of stock prices of either
               entity going forward here?

ANDERSON:      The exchange ratio is fixed and there is no price collar
               effecting the closing of the transaction. The definitive merger
               agreement will be filed later this week with the SEC and you will
               have a chance to look at it at that point.

JIM POINTER:   And you're expecting a close in the calendar in the third

ANDERSON:      Yes. It's purely speculative at this point. It depends on


               just how long the regulatory process ends up taking. We obviously
               will require shareholder approval both from our shareholders and
               Ancor from their shareholders. And, uh, we have to obviously
               file, uh, an S-4 with the SEC and that is subject to review. So,
               the process we think will likely, uh, put us out in late summer,
               early fall.

JIM POINTER:   One last question. Does your alliance now with Ancor at the
               switch level, do you think it has any impact on the marketing of
               your HBA's with other switches out there, on the part of OEM's or
               systems integrators?

H.K. DESAI:    Well, that is not our strategy. What we want to do really is we
               want to continue working with all of our suppliers and for
               interoperability. Because we have common customers with a lot of
               switch suppliers. So, we will continue working that. We're not
               going to change any strategy on that regard.

JIM POINTER:   Okay. Great. Thank you.

OPERATOR:      Glen Hynans, with Needham & Company. Please proceed with your

GLEN HYNANS:   Can you comment whether there were any other discussions that
               took place before this was agreed to? Whether there were any
               other bidders and then maybe comment on any changes to the
               combined, what the combined companies management team looks like?

H.K. DESAI:    We can't. We don't want to comment on any of these two questions.
               We really can't comment on the first two and we don't know what's
               going on on the second one. It think it's too early for us to
               really talk about the management structure.

GLEN HYNANS:   And the warrants with Sun and Ancor, is that spelled out in the
               merger agreement? I mean, any reason SUN that you wouldn't just,
               you know, take, Sun wouldn't just be taking QLogic, you know, you
               just do the exchange ratio and have Sun take the QLogic share.
               Has that been worked out?

H.K. DESAI:    Basically, yes it has, but again, that is something that's in the
               merger, definitive merger agreement, which will be filed later
               this week.

GLEN HYNANS:   Thank you.


OPERATOR:      Chau Wu with Insurance. Please proceed with your question or

CHAU WU:       Okay. Thanks. First congratulations. I just have kind of the same
               question that the previous guy asked. In terms, like,
               integration, do you plan to have this, you know, integrate their
               sales forces? Integrate their engineering teams? And also, what
               about the brand name? Will it be QLogic? Or will Ancor run as a
               separate entity?

H.K. DESAI:    QLogic is the one, let me answer your second question first.
               QLogic is the one which is going to surviving entity. So it will
               be a QLogic brand name. About the integrations, we'll start
               working on that as soon as this transaction is complete. So,
               really, it's very difficult for us to comment on our integration
               plans right now. But, there are a lot of synergies between us in
               the operations areas because we have a lot of chip expertise.
               There are synergies in the marketing and sales. There is no
               overlap on the research and develop side for the both companies.

CHAU WU:       Okay. Thanks.

OPERATOR:      John Dean with Solomon Smith Barney. Please proceed with your
               questions or comments.

CLINT VAUGHN:  Thank you. Actually, it's Clint Vaughn and firstly,
               congratulations on the transaction. Ken, I would like to direct
               my question to you if possible. Could you talk about your
               relationship you recently had with EMC? Also, your ongoing
               relationship with Inrange and Intel and how this agreement may
               effect those? And then maybe, I don't know who wants to speak
               about this, but, if somebody could address potential synergies
               with clients and maybe you said end solution, but point to point,
               rather in the end-to-end will be probably be better. But if you
               could talk about some examples of how you see that really folding
               in. That would be helpful. Thank you very much.

H.K. DESAI:    Ken do you want to take the first one?

HENDRICKSON:   Yes. I will. Alright. We've talked to each of those customers and
               the response we've gotten has been very positive. I think we can
               be a better supplier and certainly


               our commitment to those customers is every bit as good as, has
               increased because we have increased resources, increased critical
               mass to be a good supplier. The products are so complimentary and
               the engineering work is so complimentary and then we put together
               the sales and marketing and get it well coordinated, I think the
               customer is going to be a real winner here. We're really thinking
               that the employee, the stockholders, the customers, the companies
               are all going to win. Because it's such a good strategic fit.

H.K. DESAI:    Let me try to answer your second question. Like I said, the
               benefits we have is the common customer base like Sun Micro
               Systems, for example, EMC, I mean they are going to be benefiting
               from the total SAN solutions. The second benefit for the
               customers is that Ancor will have an expanded customer base
               because the relationship we have is from the customer. So, it's
               really providing a total SAN solution and that is going to be the
               big benefit for the customers.

CLINT VAUGHN:  Excellent. Thank you and just one other quick one. Are you
               planning on merging on facilities or locations at all.

H.K. DESAI:    No.

CLINT VAUGHN:  Thank you very much.

OPERATOR:      Rick Billy with SG Cowen. Please proceed with your questions or

RICK BILLY:    Gentlemen, couple of, uh, clarifications if you would. The extent
               and duration of potential dilution until you reach break-even and
               when might that be?

H.K. DESAI:    Okay. The statement that's in the press release is obviously that
               we expect that the transaction to be neutral to slightly
               accretive to calendar 2001 earnings, we're not really specifying,
               you know, a specific targeted quarter within the year. In the
               meantime, this deal won't close until late in the third calendar
               quarter this year or perhaps even into the fourth calendar
               quarter. We don't expect that the dilution in this calendar year
               will be that significant. Perhaps in the $.03 to $.05 range is
               probably a maximum exposure there.

R. BILLY:      Thank you.


OPERATOR:      ______ Chad with Chad Partners. Please proceed with your
               questions or comments.

CHAD:          Yes. QLogic is sailing along and doing great, why exactly are we
               doing this deal and why are we doing it right now? That's
               question one. And question two for Ancor is, why were your
               receivables up so much in this recent quarter?

H.K. DESAI:    Let me answer. If you look at the IDC data, what we really do is
               we supply end-to-end solutions for the SAN market. If you look at
               IDC's numbers in 1999, there was about a 500,000,000 market. HBA
               which is what we addressed at about 49%, which are $250,000,000
               TAM and switches about $150,000,000 TAM which is about 30% of the
               market. If you look at going forward in 2003, the data says that
               it's going to be 4.5 billion dollar market, which will have about
               38% HBA, which is about a $1.7 billion dollar market and about
               56% will be the switch market, which is about a $2.5 billion
               dollar market. So what QLogic is doing is really expanding its
               market by $2.5 billion dollars going forward in 2003. And the
               compound annual growth rate for that market is about 73% for the
               SANs. So this is a great opportunity for us and we need to, uh,
               looking for a place where we can expand and grow with the
               synergistic technology and culture and we feel that Ancor is the
               right company for that.

CHAD:          Bt their record is horrible and your record is awesome. And this
               dilution and the way the stock is getting hit, just, you know, it
               seems inopportune right now.

H.K. DESAI:    Well, you can't really look at the short-term benefits. What we
               look at it is what's our strategies and where we going forward.
               Where the market is going and the opportunity and I disagree with
               you that they have a horrible record. I think, what I'm hearing
               from customers is that they have a great technology and that's
               what we're looking for.

CHAD:          They preleased their, uh, their two quarters ago and their
               receivables are up this quarter. And obviously your holders are
               none too happy with your stock down 20 points today.

H.K. DESAI:    Okay. I think we've answered the question. Is there anything
               Steve or Ken you want to address on his question on the

STEVE SNYDER:  Sure. I can address that. This is Steve. The fourth quarter,


               the calendar fourth quarter, the linearity within that quarter
               was weighted much more toward the middle of the quarter and hence
               we had an unusually low DSO in Q4 and I pointed that out in our
               call at the time. And Q1 March quarter, our quarter was more
               weighed toward the end of the quarter, hence, the receivables
               were higher. So, it's really a function of timing within the
               quarter and the increase is the difference between the two
               quarters and not a reflection of any creditors or collection

CHAD:          Okay. Thank you. Best of luck.

UNKNOWN:       Alright. Thank you.

OPERATOR:      James Thayer for Prudential Security. Please proceed with your

JAMES THAYER:  Thank you very much and congratulations on the merger. Most of my
               questions have been answered. Tom, as far as that notion is
               concerned, you seem to be saying that there is going to be a $.03
               to $.05 dilution in QLogic's fiscal third quarter for the March
               2001 year. Do I understand that correctly? And, what is going to
               be the overall effect in the March 2001 year?

TOM ANDERSON:  Jim, you understood my--my general comments I think pretty well.
               I said, the one thing that I'm going to clarify here a little bit
               is we don't know exactly when this transaction will close. We
               don't know if it will close within the third quarter or within
               fourth quarter. So that obviously affects when they'll be
               consolidated with our financial results. And basically in those
               quarters, I'm just giving you a range of what could be expected
               in those quarters, given the trend that we see with the numbers
               right now. And again, we're focused on the longer haul on this
               issue next year, overall its accretive earnings.

JAMES THAYER:  Yes. I understand. Okay. And, second, you both have mentioned
               several times that there would be products synergies, but would
               you describe these in a little bit more detail briefly. Thank

H.K. DESAI:    It's really what I said. There are solution synergies, like, I
               said before, we supply the end node products which is HBA and the
               silicon and they have the switch which is in there, in the fabric
               for the customer it's a total end-to-end


               solution and that's the synergy we really talk about. It's more
               at the customer side synergy more than the product synergy. And
               then the technology synergy is the one which we both are in the
               fibre technology. We are also both investing in InfiniBand
               technology. So there is technology synergy which probably we will
               use in future products.

JAMES THAYER:  Thank you.

OPERATOR:      Michael Power with Steel Capital. Please proceed with your
               questions or comments.

MICHAEL POWER: Hi. Good morning. Quick question about the competitive landscape
               with this acquisition, could you talk about who might benefit
               from this acquisition and also maybe also your competitors who
               are really going to see more difficult challenges in the market.
               Thank you.

H.K. DESAI:    I think the biggest benefit is going to be the customers in this,
               the customers will have the most benefit because they can get the
               total solution. In a competitive market, I don't know, I mean I
               think it's going to be beneficial to us because we both will have
               our product for the SAN market.

MICHAEL POWER: Okay. Thank you.

OPERATOR:      John McClone with McClone & Company. Please proceed with your

MCCLONE:       Yeah. I have two questions. The first is if you could help me
               understand your position versus Brocade's 2010 and the Vixel 7000
               and Zoot's Capelli and how to you play down there? And secondly,
               concerning the combo HBA you just introduced, which I guess, Sun
               is OEM-ing, is that unique to Sun or will that be going out on
               all their servers and is that somehow play into all the Sun
               business that Ancor does with them in the switch area?

H.K. DESAI:    Let me answer the second question and then Ken can answer the
               first one. The second question is the combo, what we announced
               about Sun, which is that Sun is using our chip to and they have
               designed a combo card for Fibre Channel and this is for that
               product so they are buying silicon from us and this is for Sun.
               There is no impact on this for--for the switch, for the Ancor
               acquisition. And Sun has designed us in for a lot of different
               products as to its on the


               motherboard or in the server or the HBA any way. And this is one
               of the one designs with Sun. Ken, you want to take the first one?

HENDRICKSON:   Yes. I would. Thank you. We produce the broadest line of Fibre
               Channel switches in the marketplace. We actually cover the whole
               marketplace. We have 8 and 16 port switches shipping today. They
               provide full fabric. They can also run in arbitrated loop mode
               and they can translate between the arbitrated loop or the old
               private loop. Let me clarify that a little bit because you can
               have a fabric arbitrated loop or a private loop arbitrated loop.
               So let me talk about whole fabric private loop and translate in
               between. So we cover the whole switch landscape 8 to 16 ports
               with the whole range of features. We have the lowest latency in
               the business. We are the only switch that can take a private loop
               initiator and translate it up to a full fabric and have a
               performance system that has more than a 126 nodes. So we have
               several technical advantages across that product line. In
               addition, we are sampling as I speak, a 64 port storage director
               product. The only company that does that in the industry, well,
               nobody does a 64 port in the industry and we will have a 128 port
               version of that this Fall. So Ancor has the broadest product
               line. I think it overlaps all the competitor's product lines.

MICHAEL POWER: When you say translate, are you talking about dynamic
               interactions? Or are you talking about a gradability to the

HENDRICKSON:   No. I'm talking about dynamic interactions. In the private loop,
               you've got 8 bit addressing and if you want a simple minded
               model, the switch adds the other 16 bits to give you the 24 port
               address and keep tracks and so it treats that private loop device
               just as though it were full pledged member of the fabric by
               building into translation.

MICHAEL POWER: And price wise?

HENDRICKSON:   Price wise, I think we're very competitive.

MICHAEL POWER: Okay. And one follow-up on that combo quick. How much does Sun
               represent in your business now? And do you expect to


               accelerate where you will be experiencing a larger percentage of
               business from Sun?

TOM ANDERSON:  The percentage of Sun business to our total busines is only
               announced once a year. That's after a year-end. We have not
               announced our year-end results yet. Last fiscal year, they were
               about 18% of our total revenue. That's in the ballpark probably.

H.K. DESAI:    And we'll announce this Wednesday about the last fiscal year.

HENDRICKSON:   Last fiscal year. Yes.

MICHAEL POWER: I guess, what I'm getting at is, the competitors that are working
               with Sun now. Primarily, in the, Unix environment, such as
               Emulex. Do you think this is a competitive advantage over them,
               within the Sun environment?

H.K. DESAI:    What we are supplying, like I said before, we supplying products
               to Sun just the combo card is not the only thing. I mean, we're
               doing the HBA for the SCSI, we have HBA for the Fibre Channel. We
               have silicon on their motherboard for their server, low-end
               server anyways. So we supply, we will be supplying the products
               on the lot of different fronts anyway for Sun. So we really have
               a very dominant position at the Sun as far as Fibre Channel
               products are concerned.

MICHAEL POWER: So you don't expect any market share shifts then? Between you and
               Emulex at Sun?

H.K. DESAI:    Not at Sun.

MICHAEL POWER: Okay. Good luck.

H.K. DESAI:    Thank you.


OPERATOR:      ______ _______ Franklin Street Partners. Please proceed with your

UNKNOWN:       I have two questions. One is do you have any kind of cost
               synergies on acquiring Ancor and secondly, could Ancor talk about
               their competitive positioning along in terms of a


               Broadcom and others in the area.

H.K. DESAI:    Like I said before, a lot of synergies exist between us and
               Ancor. Long-term I don't expect to see anything be changed in the
               short term. But the long-term, because we are still looking at
               the expertise of the purchasing we'll probably have for the
               silicon, it is going to help us in the long term. So there will
               be some synergies in the long-term on the cost side. Ken you want
               to talk about the second question.

HENDRICKSON:   Today we make InfiniBand and Fibre Channel switches that's our
               product line. I don't believe that Broadcom is in that product

UNKNOWN:       O.k. sorry I meant to say Brocade not Broadcom. I'm sorry about

HENDRICKSON:   We are the only ones in InfiniBand we're not shipping those yet
               but we are in a development mode there. As far as the Brocade
               switches our product line is virtually parallel with theirs. We
               have some features that they don't have but 8 port switches, we
               both sell 16 port switches we have private loop features we have
               public loop features. Ours is a little faster, ours does
               translate from a private loop initiator into a full fabric and
               probably most importantly we have 64 and 128 port switches in our
               product line. So I would say that we include all of Brocade's
               product line within our product line and then some.

UNKNOWN:       Do you have any kind of lead over Brocade and how much time
               Brocade needs to catch up with you.

HENDRICKSON:   I think that's a horse race. You take a point in time with any
               pair of competitors in a development company and somebody will
               come out with features ahead of one another. We feel that we are
               ahead of them right now. If you ask Greg, I suspect he'd claim
               that he was ahead of us and it is a horserace and that's one of
               the advantages of this acquisition is it gives us the critical
               mass and the resources to be able to really run a good race, so
               that's why we're so enthusiastic about it.


UNKNOWN:       O.k. Thanks.

OPERATOR:      Chesapeake Partners, please proceed with your questions.

UNKNOWN:       Congratulations and a couple of questions. One, could you tell us
               a little bit more, give us a little bit more color on the
               background to the transaction and two, you mentioned perhaps a
               September or October closing, I was wondering why this should
               take that long it sounds like a clean deal and then also I'm
               wondering you know, given the track records if there is some
               protection for QLogic that's explicit. In other words are there
               financial tests or product milestone tests or development tests
               that Ancor has to meet?

TOM ANDERSON:  O.k. First of all let's address the issue of the length of time
               to do the transaction. Uh, that is - you have to remember this
               also our year-end. We're going to be announcing our year-end
               results in two-days. We have a number of SEC filings to undertake
               as a result of year-end and as a result of this transaction and
               we're just anticipating that at worse case we'll probably have
               some commentary from the SEC. There is really nothing we feel out
               of the ordinary in this type of transaction but the SEC is
               obviously very diligent about matters these days. So in that
               regard we think that it could draw out that long. There is always
               the chance that it could go much faster too. The second part in
               terms of the milestones, etc. we're not going to get into
               addressing that today as I say there is some SEC documentation
               that's going to be filed with regard to the merger later this
               week, but we feel that we've done certainly a good job in the due
               diligence process and we feel very comfortable with where this
               company is heading and we think that we can obviously assist
               Ancor in moving along to identify the area even faster perhaps
               than they would have been able to do alone.

UNKNOWN:       So there are no earnings test or product development tests?

TOM ANDERSON:  Again, that's something that we are not commenting on here today.

UNKNOWN:       O.k. Thank you.

OPERATOR:      _______________ of Morgan Stanley Dean Whiter please proceed with
               your questions or comments.


UNKNOWN:       Yes, I was wondering when a deal's announced there is a period of
               uncertainty where at times customers defer decisions on
               purchasing products and I was wondering if there is any plans
               that the companies have for preventing that sort of thing.
               Anything you can do ahead of the deal that would allow the
               company to continue selling during the course of completing this

H.K. DESAI:    You know - I kind of -- in our business it takes a lot of time to
               get the design win. It's not like the business is made in a very
               short period so whatever design means they have or what we have
               in our product I think that's not going to change at all. We will
               continue without any problems or issues because its a long way
               inside the design and the qualification cycles. Um, for the
               future one I don't think people is going to wait for making the
               decisions because what this is really providing to the customer
               is that they have better resources available with a combined
               company so there is a benefit to them.

UNKNOWN:       O.k. Thank you.

OPERATOR:      Mike Ridgelay with Regan MacKenzie please proceed with your

MIKE RIDGELAY: Yes, I have three real quick questions. First you mentioned the
               operational impact going forward and long-term regarding
               purchasing silicon and what not you have a pretty competitive
               gross margin in the industry in general, what long-term impact do
               you see to the gross margin with the addition of these new
               products. Secondly, you mentioned there are some new customer
               opportunities. You mentioned some of the overlaps could you
               identify maybe a little bit of detail from the new opportunities
               that you see with QLogic products given the Ancor customer list
               and finally, just a little bit of discussion perhaps on how
               you're positioning the Anchor switch vs. Brocade in the NT
               environment and how you see that environment progressing. Thank

H.K. DESAI:    Like I said, there are benefits long term because of the synergy
               we'll have on the marketing and sales side. The gross margin is -
               we really don't know right now. We cannot comment on that when I
               don't think there is going to be an impact on the gross margin of
               what we doing our self. But gross margin for Ancor long term, we
               don't have a date right


               now we'll let you know as the time goes. The customer opportunity
               is we have a lot of common customers between us and what this
               deal is really providing is expanded opportunity for both of us
               and the relationships we have. Ken you want to answer the last
               question about the NT market for the switch?

HENDRICKSON:   Why certainly, H.K. you have a lot of credibility in a good
               partnership with several customers in that space. I think that by
               being part of QLogic the Ancor switch can benefit from those
               relationships and that credibility with the NT customers.

MIKE RIDGELAY: Great thanks a lot and we'll listen to you again on Wednesday.

TOM ANDERSON:  I would just like to add one further. . . a little bit of
               commentary on the general financial question that was asked and
               maybe I wasn't real clear on this a little earlier. We do expect
               to achieve accretion in the first half of calendar year 2001 on
               this transaction, but obviously we're not going to get into the
               details today of how we're going to affect things like gross
               marginsand operating expenses and other details but we feel
               pretty confident about the overall outcome of the financial
               success of the two companies.

HENDRICKSON:   I'd like to make one addition too if I could to my last comment.
               I think its important to consider that there will be second
               sourcing opportunities as this industry matures and I think that
               by being part of QLogic and having their relationships and their
               credibility with the NT customers that will aid us in the second
               sourcing and even in some cases first sourcing opportunities of
               those customers. Thank you.

OPERATOR:      Glen Hynans with Needham & Company please proceed with your
               follow-up question.

GLEN HYNANS:   Couple things. One of the callers asked about the background of
               the transaction can you give us any color on how long you've been
               talking to one another. Two, I guess there was an announcement -
               a press release about interoperability between certain switch
               vendors being demonstrated this morning. Can you comment on more
               specifically just what


               interoperability is being demonstrated and whether this
               represents a major milestone in the process towards a switch to
               switch interoperability or not and lastly are there break up fees
               in this deal and can you tell us anything there.

UNKNOWN:       In terms of the - how the transaction - the color of how it came
               together, all the details of that will be in the jointly filed
               S-4. Those were recent discussions that obviously were held
               between the CEO's and I think that's as far as it went to answer
               that question. Go ahead H.K.

H.K DESAI:     Ken do you want to take the interoperability questions?

HENDRICKSON:   Yes I will. There was a OSFI press release this morning which
               talked about the demonstrations that are going to be demonstrated
               at N plus I which is a conference that's going on in Las Vegas
               this week. The announcement was that Ancor, Gadzoox, Vixel and
               MacData along with Inrange will be demonstrating switches in a
               fabric working together heterogenous fabric. There was one switch
               supplier that is part of OSFI which is not taking part in the
               demonstration and that's Brocade.

UNKNOWN:       I think we have time maybe for one additional question we do need
               to cut this teleconference at 45 minutes and its just about at
               that time limit.

OPERATOR:      Robert Monigue with Morgan Keegan please proceed with your

MONIGUE:       Just a few follow-ups. First of all building on that interop
               question. Ken or H.K. could maybe either of you comment on the
               macro recent trends at the OEM's on desirability or how strong
               they are pushing the industry to achieve interoperability. Second
               of all on the director type products maybe you could just refresh
               your view of how much of the market you see moving from 8-16 port
               switch categories over to higher port count or high availability
               type products like the director and are typically are you seeing
               customers create these as separate procurement categories or are
               these gonna be viewed with established design situations in the
               eight and sixteen port and then finally - get my little shopping
               list in here - Ancor's got a relationship with Intel on the
               InfiniBand and H.K. I know your very active in both


               VI and InfiniBand any direct impact or synergy that you see in
               the Intel relationship with those technologies. Thank you.

H.K DESAI:     Uh, Ken I think you can take most of the questions there.

HENDRICKSON:   O.k. I will. Thank you for the question Robert and I'll point you
               to the recent EMC announcement where both Brocade, Ancor and
               McData are in the announcement in the form of the NC switch. A
               lot of our customers are now demanding interoperability and I
               think its a strong trend. Speaking from my experience in the past
               I will tell you that people want dual sourcing, they want
               interoperability without it the industry is severely handicapped.
               So there will be a lot of pressure for interoperability. With
               regards to the director we are seeing that in the same category.
               We are seeing people wanting a switch family. A lot of our Unix
               people want to build fabrics that not only have a 8 and 16 port
               switches but they have a fabric topology that has 64 port
               switches and 8 and 16 and its interesting because you might
               assume in the center actually it depends so much on the fabric.
               The larger switch may be on the edge and you might have a small
               switch in the core it might be reversed. It's that flexibility.
               What our customers want is to be able to provide a growth
               scenario for their end-users so they want to be able to build a
               fabric that can expand over time and keep that customer and by
               having a full family of switches they have a better chance of
               providing that growing fabric for their customers. As far as
               Intel is concerned we're very active, we're very proud of the
               fact that we're writing a lot of the standards documents and very
               active. One of the comments I got this morning when we did the
               all hands meetings and I will take this opportunity to make this
               statement that our employees are very enthusiastic about this and
               feel that teaming with QLogic is going to be extremely beneficial
               but one of the advantages is that they knew a lot of QLogic
               people from the Intel sponsored and InfiniBand meetings.

H.K DESAI:     I like to add a couple of things what Ken said is that the QLogic
               management team is and the employees are very enthusiastic about
               this deal. We are getting a tremendous positive response inside
               QLogic. I also have known Ken for many many years. I use to
               really work for him one time at WB so we have great relationship
               we also have secured employment contracts with the team at Ancor.
               So we are


               looking forward that this is going to be very very exciting
               fortunately for both companies and we are looking forward for the
               challenges on these things. With that Tom, do you have closing

TOM ANDERSON:  We want to thank everybody for joining us for this special
               teleconference. As a reminder those of us at QLogic will look
               forward to discussing our fourth quarter and year-end results
               with you on Wednesday, May 10th at 2:30 p.m. PST. Thanks to
               everybody for joining us.

H.K DESAI:     Thank you.

OPERATOR:      Ladies and Gentlemen that does conclude our conference call for
               today you may all disconnect and thank you for participating.

                                     * * * *


                           ABOUT ANCOR COMMUNICATIONS

         Ancor Communications Inc. (Nasdaq: ANCR) provides high-performance
SANbox(TM) Fibre Channel switches for storage area networks (SANs). The
company's customers include EMC, Hitachi Data Systems, INRANGE Corporation, MTI
Technology Corp., Sun Microsystems, and premier SAN resellers, including Bell
Microproducts and Datalink. The company was the first to deliver a Fibre Channel
switch, and the first to hit the one-gigabit performance level. Ancor, an ISO
9001 quality certified company, is a member of the Fibre Channel Industry
Association, the Storage Networking Industry Alliance, the InfiniBank Trade
Association, the ANSI Standards Committee, and the University of New Hampshire
Fibre Channel Consortium to promote the advancement of Fibre Channel standards
and interoperability. Information on Ancor is available on the Web at

                                  ABOUT QLOGIC

         A member of the Nasdaq-100 Index, QLogic Corporation sold more Fibre
Channel host bus adapters in 1999 than any other manufacturer in the world
according to IDC. The company is also a leading designer and supplier of
semiconductor and board-level I/O and enclosure management products targeted at
the computer system, storage device and storage subsystem marketplaces. QLogic
high-performance controllers are implemented in products from technology leaders
such as AMI, Compaq, Dell, Fujitsu, Hitachi, IBM, Iwill, Quantum, Raidtec,
Siemens, Sun Microsystems and Unisys. The company's high-performance Fibre
Channel and SCSI solutions play a key role in enabling enterprise-level storage
area networks (SANs) and the company's enclosure management products monitor and
communicate component information that is critical to computer system and
storage subsystem reliability and availability. For more information about
QLogic and its products, contact QLogic Corp., 26600 Laguna Hills Drive, Aliso
Viejo, CA 92656; telephone: 800/662-4471 (sales); 949/389-6000 (corporate); fax:
949/389-6126; home page


         QLogic Corporation ("QLogic") and Ancor Communications, Incorporated,
("Ancor ") plan to file a Registration Statement on Form S-4 and other relevant
documents with the Securities and Exchange Commission (the "SEC") in connection
with the merger, and QLogic and Ancor expect to mail a Joint Proxy
Statement/Prospectus to stockholders of QLogic and Ancor containing information
about the merger.

         Investors and security holders are urged to read the Registration
Statement, the Joint Proxy Statement/Prospectus, and other documents filed with
the SEC carefully when they are available. The Registration Statement, Joint
Proxy Statement/Prospectus, and other filings will contain important information
about QLogic, Ancor, the merger, the persons soliciting proxies relating to the
merger, their interests in the merger, and related


matters. Investors and security holders will be able to obtain free copies of
these documents through the website maintained by the SEC at
Investors will be able to obtain copies of the documents free of charge from
QLogic by directing a request through the Investor Information portion of
QLogic's website at or by mail to QLogic Corporation,
26650 Laguna Hills Drive, Aliso Viejo, CA 92656, attention: Investor Relations,
telephone: (949) 389-6000. Documents filed by Ancor will be available free of
charge from Ancor by directing a request through the Investor Information
portion of Ancor's website at or by directing a request by
mail to Ancor Communications, Incorporated, 6321 Bury Drive, Eden Prairie, MN
55346, attention: Investor Relations, telephone: (612) 932-4000. In addition to
the Registration Statement and the Joint Proxy Statement/Prospectus, QLogic and
Ancor file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information filed by QLogic or Ancor at the SEC public reference rooms at 450
Fifth Street, N.W., Washington, D.C. 20549 or at any of the SEC's other public
reference rooms in New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms.
QLogic's and Ancor's filings with the SEC are also available to the public from
commercial document-retrieval services and at the Web site maintained by the SEC



A description of the identity of the participants in the solicitation and a
description of their direct or indirect interests is set forth in the Rule
14a-12 filing made by Ancor on May 22, 2000 (relating to a press release dated
May 8, 2000), under the caption "Solicitiation of Proxies; Interests of Certain
Persons in the Merger" and that description is incorporated by reference.


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission