Always makes me nervous to speak on a conference call.
It's a fast market for me this morning so I won't write much now, but I generally thought the call was good.
Looks like they have good control on spending going forward and a lot of room to bring down yields. They have leading edge products. Exiting this quarter with 3.2/3.4 as the biggest seller, and expecting 4.3 to lead next quarter.
Don't see drawing on 100 million credit facility. Milestone cash neutral including Cap ex next quarter. 6 to 7% asp declines in heads in Sept and anticipates the same going forward. SGA decreased, but not much more to get here. R&D will stay flat or perhaps reduce 1 to 2 million. Cap ex dropping as they've added most of what they need to make next gen. 15 million heads is under utilization, but HSA's is good. Currently finishing a HSA in 7 weeks. 13.6 inventory turns vs. 10.9 last year.
GMR will be 50% of sales in mid fiscal 99.
New QNTM SDLT head win could become 10% of revenues. Asp's for tape heads are "10, 20 and even 30 times" disk heads. Think they have technical advantages in tape over many competitors.
They have their first enterprise drive head win. Probably with WD.
Actually seeing a slight rise in heads per HSA which could possibly indicate they are just getting into higher end drives.
Very focused on getting QNTM back. Currently competing on their high end drive. As you all may know QNTM is late with a 4.3 gig program. With all the success RDRT has had in this group, they should have a very good chance of supplying QNTM next year IMHO.
Several times it was asked if it was favorable if Quantum exited the head business. Each time, they all spoke of this as though QNTM would just close the doors, not sell this capacity to another company. I think this would be healthy for the market, but I'd also think QNTM would want to recover something by selling this unit if at all possible.
So far, pico yields on GMR not much different than AMR. Expect vol. pico shipping in March qtr.
Looking at 18 to 91% gross margins. Looking at revenue increase of low teens. See profitability soon. Cautiously optimistic. But also confident they have some good technology.
This quarter was very backend loaded.
Reduced head count this qtr from 22300 to 18200 mostly due to closure in Malaysia.
I seem to recall they were currently sending out samples for range of heads that would handle up to 15 gig per platter. Looks like they have a good technology road map. Question is whether the others are going to mirror these accomplishments, and if they can execute on manufacturing. It is very favorable that they've taken the lead in areal density from IBM.
Anyway, I thought it was pretty good. I'm surprised they are selling off this morning. Maybe they'll end the day up if they can get some upgrades today and tomorrow.
Regards,
Mark |
