AND for those of you wondering why IOMEGA was down today despite the good news that keeps coming out of IOMEGA central here is the latest on Quantum and its negative effect on the whole disk drive industry.
Dow Jones News Service -- June 13, 1996
Disk Drive Makers' Stks Down On Quantum 1Q Outlook
By Carmen Fleetwood
NEW YORK (Dow Jones)--A number of stocks in the disk drive industry felt the repercussions
of Quantum Corp.'s (QNTM) announcement late yesterday that its fiscal first-quarter earnings
wouldn't meet analysts' estimates.
Quantum blamed the shortfall on weak demand for disk drives in the personal-computer market
and the resulting pressure on prices. The Milpitas, Calif., company said it would earn between 5
cents and 15 cents a share; a First Call survey gave a mean estimate of 39 cents a share, and the
company earned 24 cents a year ago.
A number of industry analysts lowered their rating for Quantum, including Bear Stearns & Co.,
Hambrecht & Quist Inc. and Gruntal & Co. Some market sources said Donaldson Lufkin &
Jenrette Securities Corp. also cut its ratings, but the analyst wasn't immediately available to
comment.
Others just cut earnings estimates, such as Morgan Stanley & Co. analyst Robert Maire, who kept
his neutral rating for the stock, but lowered his fiscal 1997 estimate to $1.49 a share from $2.87.
Quantum lost $2.28 in fiscal 1996, ended in March, including charges.
Investors, believing the same situation would affect other disk-drive makers, pulled out of many
industry stocks, whether or not they were connected to Quantum.
Basically, disk drive makers had a ''holiday'' last quarter as Seagate Technology Inc. (SEG)
couldn't ''ramp'' up its newly acquired Connor division as quickly as they wanted, according to
Maire. Connor Peripherals Inc. was a personal-computer disk-drive maker which Seagate
acquired in February.
Connor's full integration into Seagate has resulted in an oversupply of disk drives for PCs at the
same time prices have slackened, others added. Seagate is considered the No. 1 seller in the
computer-disk-drive business.
But some market observers said the situation at Quantum is aggravated by company-specific
problems.
Quantum's first-quarter earnings also were hurt by slower-than-expected acceptance of its new
Bigfoot drives from OEM customers. Quantum was counting heavily on some customers, such as
Apple Computer Corp. (AAPL), that probably won't have as good results in the quarter as
competitors, according to Gruntal analyst Roxane Googin.
''While Bigfoot was supposed to be a nice addition to Quantum's earnings, it now appears to be a
really unwelcome drag on results,'' Googin said.
Among the stocks that fell included component equipment maker Stormedia Inc. (STMD), off 3
1/4, or 14.4%; component makers Hutchinson Technology Inc. (HTCH), off 4 15/64, or 8.1%,
and HMT Technology Corp. (HMTT), off 1 3/8, or 7.1%; and disk drive makers Seagate
Technology, off 1, or 2.1%, and Western Digital Corp. (WDC), off 1/4, or 1.1%. Quantum
shares fell 2 5/8, or 14.2%, to 15 7/8.
Regards,
Erik. |
