Steel Partners Continues to Attack Adaptec…

Steel Partners II, L.P. commented on the second quarter 2010 financial results released earlier today by Adaptec, Inc.,
which highlights the Company’s rapidly deteriorating performance. With
the consent deadline just a few days away, Steel Partners also again
urged stockholders to vote the WHITE consent card to remove Adaptec CEO
Sundaresh and Legacy Director Loarie.

“After reviewing Adaptec’s second quarter results, it is clear
that the operating performance continues to rapidly deteriorate under
Mr. Sundaresh and his so-called turnaround plan,” stated Warren Lichtenstein of Steel Partners. “How
can the Legacy Directors tell you with a straight face that Mr.
Sundaresh’s efforts are gaining traction? Is revenue declining 40% from
$31.6 million to $18.4 million, operating losses going from $1.8
million to $7.2 million, and projected third quarter revenue dropping
even further with a larger operating loss their idea of traction?”

Mr. Lichtenstein continued: “It is amazing that anyone can find
it acceptable for Mr. Sundaresh to continue to run Adaptec. It’s even
more amazing that CEO Sundaresh and the Legacy Directors continue to
throw money into a rapidly deteriorating business instead of selling
the business operations as the independent financial advisor
recommended. It is time to end the reign of the Legacy Directors once
and for all before our respective investments in Adaptec fall further.”

 
(From Company press release 10/29/2009)
 
Steel Partners urged Adaptec stockholders
to consider the following:

• Comparing second quarter of fiscal 2010 to second quarter of
  fiscal 2009, the Company’s net revenues declined more than 40% from
  $31.6 million for the Company’s 2009 second quarter to $18.4 million
  for the 2010 second quarter.
• Does this sound like the sales of the Company’s products are gaining traction?
• The
  Company’s loss from continuing operations for the second quarter of
  fiscal 2010 was $7.1 million compared with $1.7 million for the second
  quarter of fiscal 2010.
• Net income declined to negative $3.7
  million for the quarter compared to net income of 3.3 million for the
  second quarter of fiscal 2009, and negative $3.2 million for the six
  months ended October 2, 2009 compared with $8.3 million for the same
  period in fiscal 2009.
• With the sales of the Company’s
  products in a state of decline, operating and net losses accelerating,
  do you really think Adaptec will be able to generate positive operating
  cash flows moving forward under Mr. Sundaresh?
• Research and
  development expense increased more than 35% from the first half of
  fiscal 2009 to the first half of fiscal 2010. Additionally, over the
  same period selling, marketing and administrative expenses plus R&D
  expenses have increased significantly to about 73% of revenues. If the
  run rate operating loss continues for the rest of the fiscal year, it
  appears the Company could lose over $25 million dollars on $76 million
  run rate revenues.

Mr. Sundaresh’s plan appears to involve nothing more than the Company
spending more and more of our money with no returns, which we believe
will lead to our cash balances decreasing as the year progresses.

If our solicitation is not successful, Mr. Sundaresh will be permitted
to continue his value-destroying plans – Don’t let this happen!

Despite all of his failures, which are crystallized by these abysmal
financial results, Mr. Sundaresh has now proposed a Board that would be
controlled by himself, Messrs. Kennedy and Van Houweling and three
directors hand-picked by Mr. Sundaresh. We cannot afford to continue
with zero accountability and oversight at the Company.

Voting to remove Messrs. Sundaresh and Loarie on the WHITE consent card
is the only way to ensure a more balanced Board that is fully committed
to maximizing stockholder value.

Fortunately, it’s not too late to save Adaptec and your investment!

You cannot afford to leave your investment in Mr. Sundaresh hands.

Steel Partners recommends that all Adaptec stockholders sign, date and
return the WHITE consent card today! We urge you not to revoke your
consent by signing any gold consent revocation card sent to you by
Adaptec or otherwise, and to revoke any consent revocation you may have
already submitted to Adaptec.