Are Seagate's Parts Worth More Than Its Whole?

Also, why Nike is going with the softer side of Sears and fun on <I>Fox</I>.
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Opening the Seagate:

Welcome back to our mystery money manager whose

last comments here -- anonymous, as always -- explained why he thought

Apple Computer

(AAPL) - Get Report

was a buy when most of Wall Street thought it wasn't.

Now his favorite:

Seagate Technology

(SEG)

, which he owns and has no current intentions to sell.

His rationale: The parts are worth more than the whole.

Here's the breakdown: The stock, as of Friday, had a market value of $5.9 billion. However, the parts of the company include approximately 69 million recently acquired shares of

Veritas Software

(VRTS) - Get Report

, $900 million in net cash, 6 million shares of

SanDisk

(SNDK)

, around 20% of

Gadzoox Networks

, which is going public this week, a 35% stake in

Dragon Systems

and its majority interest in

Seagate Software

.

His estimate of the value of those parts: $6.3 billion, or $400 million

more

than the stock's current price, and that

doesn't

include the company's principal business as the world's largest maker of disk drives. That business has been pummeled lately, largely as the result of a price war, started by Seagate, to grab more market share at the expense of current earnings, which fell below analysts' expectations in the recently reported fiscal fourth quarter.

Meanwhile, Seagate has been an active acquirer of its own stock this year, buying back 10% as of last March with plans to buy another 10%.

How does the company unlock value? That's what our mystery man wants to know. Seagate officials reportedly said on their earnings conference call last week that they are looking closely at options regarding the Veritas stock, acquired through last month's sale of a part of its software business to Veritas.

In our mystery man's dream world, Seagate would issue new Seagate convertible securities that would be convertible into Veritas common, using cash from the sale of the convertible to buy back more stock. "If they reduce shares from 220 million to whatever," he says, "imagine what would happen when they start making money again." (As profits are spread over a smaller share base, earnings per share rise.)

Will our mystery man be disappointed?

Seagate officials couldn't be reached.

Nitpicking Nike:

What does it mean now that, after a 10-year absence,

Nike

(NKE) - Get Report

has found the softer side of

Sears

(S) - Get Report

? Probably more to Sears than Nike. Nike and Sears parted ways when it was apparent the Sears image didn't jive with Nike's image. That relationship was rekindled last week, when Nike said it would supply Sears with shoes geared to women and families.

But some analysts believe the relationship with Sears is evidence that Nike's business is maturing and that it's pulling out all stops to drum up sales. "It's a combination of the fact that they do need volume, and the fact that they think they can finesse it" so that it will not hurt their image, says analyst Faye Landes of

Thomas Weisel Partners

. "That's not the easiest thing to do."

A Nike spokeswoman concedes biz is maturing, but says that the return to Sears is more a reflection of a change at Sears than of desperation at Nike.

Perhaps, but this warning: What may be good for Sears and what might be good for Nike is not likely to be good for

Reebok

(RBK)

and

Adidas

, which until now have had Sears to themselves.

Fun at Fox:

Saw

Cramer's

fab

writeup on our first Fox show. However, as usual, he only told part of the story. Here's my rewrite, in JJC style, of an excerpt from Cramer's interpretation of the Fox show. My comments on his take are in bold:

JJC: So we all mixed it up. First we tackled the

Microsoft.com

tracking stock and Herb made me eat my words that all tracking stocks are bad because I admitted I would be a buyer of this one.

(Go back and read his earlier piece, from January, which was headlined , "Doing the Wrong Thing: Tracking Stock." He called them "spurious" creations of greedy investment bankers; nothing more than a sucker's play.)

JJC: The difference, as Dave Kansas,

TSC's

editor-in-chief, pointed out, is that

Microsoft's

(MSFT) - Get Report

management is so great that you want to buy any stock they issue, including a tracking stock.

(JJC hopes it's a good idea because he's loaded to the gills in Microsoft.)

JJC: Then we talked about whether

Coke

(KO) - Get Report

was a buy. Herb was positively inclined, which almost made me fall out of my chair. I talked about how these guys are like Brutus; the fault is not in the monsoons or bad weather or bad-smelling Coke or unrest, but in themselves. Management doesn't know what it is doing. (Of course, the Brutus thing came to me after the taping, but that's the way it is sometimes.)

(Of course he doesn't tell you that I said as long as a company has a strong brand and no product that can become technologically obsolete, it's likely to recover. If management is the problem, I said, fine: It'll be replaced. But Coke as a brand going bad? Remember when they were dumping on

McDonald's

(MCD) - Get Report not long ago? Same thing here. Then JJC pulled a wrinkled newspaper clipping of Coke's earnings out of his pocket and showed how they blamed it on silly externals like the monsoon. And I tell him that it's just like a short-term trader to look at a quarterly report and draw all kinds of conclusions. That's the difference between traders, like JJC, and investors. Yep, that's me, positive. And I don't hold a position!)

JJC: Finally, Dave talked about how senseless and stupid it is to try to follow what

Fidelity

is up to, in this case with its

AOL

(AOL)

position, because you really have no way of knowing that the firm is really doing. We all agreed.

(Yes, but what he doesn't tell you is that I point-blank asked him, on camera, what he would do if he discovered that Fidelity had sold all its AOL. He actually had to pause for a second -- OK, only a split second, if you can believe that -- and then he said -- he'd buy more!)

And that's ... the rest of the story. Hope to see you next week!

Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

herb@thestreet.com. Greenberg also writes a monthly column for Fortune.

As originally published this story contained an error. Please see

Corrections and Clarifications.