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Technology Stocks : Disk Drive Sector Discussion Forum
WDC 273.37+9.2%1:56 PM EST
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To: Sam who wrote (1805)12/16/1997 1:13:00 AM
From: Frodo Baxter   of 9256
 
>Depends on if the restructuring charge is an "honest" one or not.

Please elaborate. As I'm having a bear fit over WDC, let's take a look at their charge:

"The Company had previously announced plans for a one-time charge of between $15 to $30 million associated with its accelerated transition from production of drives with thin film heads. This charge has increased to $85-$95 million, primarily due to a further reduction of unit volumes of desktop hard drives with TFI heads and from the Company's decision to exit the 3-inch portable hard drive business."

Sounds to me like they're writing down some inventory and accelerating depreciation costs at end-of-life. In other words, past overly-aggressive accounting is coming back to bite them in the ass. Sounds like those jackal class-action lawyers might have a case, though they'd be hard-pressed to prove intent to deceive.

Also, while I will concede honest charges exists-- severance and exit costs-- they still damage the balance sheets in exactly the same way lousy earnings do. Can you muster a convincing argument as to why one-time charges (which tend to be anything but) should be forgiven in a manner not usually accorded to missed earnings? That the charge "enhances competitiveness"? Bollix! You give me a few million to magically make disappear, and I'll engineeer a "turn-around" with a few cents reappearing, too...
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