Disk Drive Sector Discussion Forum Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Disk Drive Sector Discussion Forum

WDC 176.34

-5.8%

Dec 12 9:30 AM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Z Analyzer who wrote (2596)	2/27/1998 4:41:00 AM
From: Z Analyzer	of 9256

HTCH's basic problem is that they have capacity for about 14 million conventional suspensions per week with production running at seven million and undoubtably losing significant money. This situation is bleak because HTCH's own TSA production will cut into these volumes while drive manufacturers source all they can to the two Thai competitors who now are undercutting HTCH on price. The successful and rapid transition to TSA is now becoming critical for HTCH and a write-off of significant conventional capacity is starting to look like a major risk. Another issue is that if HTCH is right that they have not lost a lot of market share, it would appear that total suspesion demand has dropped substantially during the past nine months, perhaps indicative of reduced scrap associated with MR and maybe a reduction in platters per drive. Another big question is that with high end drive inventories high nine months ago and still high at end of Dec. qtr despite robust server sales, why has HTCH for several quarters seen a dramatic drop in suspensions for the high end market of which they claim 90% share. Difficult to reconcile. SEG's high end (as well as desktop) are clearly the biggest factors in HTCH's volume drop. Difficult to say to what degree SEG will recover but question is why haven't suspensions for highend drives simply gone to those who have been more successful in that market. Bottom line is too many questions HTCH can't answer, increased dependence on TSA becoming THE industry standard, TSA production this qtr which looks to be below target, and a much longer road to breakeven assuming no sudden spike in conventional production. Will be interesting to see whether HTCH's year and a half old support in the face of disappointment can withstand this further disappointment. Also, whether Fidelity with, I believe 10% of HTCH, will keep the faith. And HTCH needs additional cash for TSA which is now going to become more difficult and expensive to obtain.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next