HMTT potential and Jaz.
I posted the following on the HMTT board. Some folks here may want
to do a little more research on HMTT and its future potential...
Young
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To: grace
From: Young D.T. Nguyen Jul 11 1996 11:54PM EST
Reply #228 of 229
On the potential of HMTT...
Grace,
The 5-year Maxtor deal is very nice, but IOMG 's Jaz drive will
be HMTT 's ace in the hole. Jaz 's contribution to HMTT last quarter
(mar) was insignificant. This quarter it grew to "between 10-20%" of total
revevue, as HMTT said in the conference call this afternoon. Look for
number to explode in coming quarters.
The main limitation to HMTT 's revenue and earning growth right now
is capacity. They are adding capacity at existing site and also planned
a big expansion starting in early 1997 (main reason for the cancelled
secondary) "in order to meet customer demands" (from HMTT prospectus.
By the way, HMTT produced one the best prospectus and company
report I have ever seen - lots of great info.)
Demand is outstripping HMTT 's ability to supply. Unlike other disk vendors,
they focus only on high-margin, high-end disks which are not plentiful.
As a result, I think their price will continue to command a premium, and their
propects will continue to be great in the foreseable future - despite an apparent
slump in the data storage industry.
HMTT is the only one to beat estimate in its group so far, while basically all others
have warned of disappointing earnings and sales (Obviously, many people expected
HMTT to have disappointing earnings also, that's why it tanked along with others
after they released bad news)
With a current PE around 10, a tripple-digit revenue growth rate, 42% gross
profit, 21% net profit (yes, their net profit % has been unbelievable in the
past few quarters), and far better performance than its closest competitor,
HMTT has all the ingredients to be a great and safe investment. With
above fundamentals, a PE of 20 would still be quite cheap. |
