Some cursory comments on the 10K taken from a once over:
It is very clear that AXC has not thrown in the towel on KM!!! They are still negotiating with all who they approached and who approached them. In fact, they are RAMPING UP KM part of AXC. They have several positions relating to KM for hire, they expect more RD&E to goto KM this year, and they have many more patents in the works relating to KM. Doesn't sound quite like KM is dead, does it? In fact, read it for yourself if you can pick up the clues lying around the 10K, KM has never been given more priority in the company! Last year lots of attention was given to the new line of double density DST and the movement to smaller part of the campus, this year there are no such distractions listed. Reads exactly like 97 will be the year of the commercialization of KM. Nothing else is given such hi priority.
They cannot see any reason that they know about why any wouldn't adopt KM, except price. They have to charge an unknown to us % above the Maxtor sweetheart deal, and the only factor AXC knows that would stop adoption of KM is if this minimum legally demanded price is too hi to cause others not to adopt. We know AXC wants KM to be an industry standard, and so the whole thing from beginning to end is priced lower than it needs to be, so I don't see price as a real threat to full acceptance, at least of the proven TFI line. Bottom line- there's no known reason to AXC why others won't adopt this. This is important for all of us impatient shareholders (that's 100% of us I believe) who are tempted to equate delay with refusal. NOT SO. IR hinted at this when Karen said, "no news isn't bad news". AXC does leave the door open to 2 possible unknown stumbling blocks- future techno advances obsoleting or circumventing KM, or future unknown problems with implementing KM. These are standard industry concerns, not special to KM at all.
So while the investment world has either given KM up for dead or for a minor poorly profitable footnote with Maxtor, KM's publicly available documents say otherwise. KM is alive and well, there's no good reason (not ruling out stupid decisions tho, tho the disk drive industry is absolutely unforgiving in short order for messups of that sort) for other TFI manufacturers not to adopt it, and negotiations are ongoing.
Those who've gotten the AXC Road show stuff can see how absolutely compelling KM is economically. I think the next signed agreement with whoever, I hope WD myself because of it's huge presence in the TFI market and growing market share threatened by Seagate's proclamation to take it back, will cause a MAJOR reversal of sentiment and revaluation of AXC shares- upward. Suddenly KM will be priced back in the stock. The price of this stock, now 6 3/8, isn't even valuing the burgeoning DST line fully, not to mention the very strong possibility of a Mitsu win and even Maxtor's meager revenues in 98. You're getting this at a 50% off discount here, but it won't last forever! |
