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Technology Stocks : QUANTUM
QNTM 9.210-6.4%Dec 12 3:56 PM EST
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To: Z Analyzer who wrote (5763)11/27/1997 11:12:00 AM
From: Rational   of 9124
 
Z,

I thought over the issue of spin-off more carefully. Strategically, it is not a good idea:

* Leaving the DD Division independent can wipe it out due to fierce dumping by SEG. Observe that SEG price was up yesterday while QNTM was down because the WS seems to believe that SEG will survive among all DD makers. The WS sellers of QNTM stock are stupid, IMHO, by assuming that QNTM is a pure DD player.

* I therefore recommended in my earlier post that QNTM sell the DD Division to, say, SEG for a hefty profit. But, that will be myopic because eventually the DD business will be limited to a few strong players and be profitable. WDC will continue to fall, IMO, until some of the stronger players buys them out. QNTM may like to buy WDC and operate the DD business to compete with SEG. I feel something like this will eventually happen.

* QNTM's DD division is very strong, competitive and produces better DDs than the rest of the market. Selling this will be unwise because this division will eventually be a winner after SEG runs out of cash for dumping. In this sense, keeping DLT within the existing QNTM structure makes SEG run out of steam and WDC get ruined.

* I think QNTM's business model is ideal for an unambiguous leadership in this area.

Sankar
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