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Technology Stocks : QUANTUM
QNTM 9.380-4.7%Dec 12 9:30 AM EST
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To: John A. Shaffer who wrote (6180)12/6/1997 1:44:00 PM
From: Rob S.   of 9124
 
The thing to keep in mind is that Quantum doesn't make earnings estiamtes (or any mid-large cap company for that matter). Quantum has issued guidance for sales and margin expectations and leave it up to industry analysts to crank in average selling prices (ASPs), revision on margins (derived from historical margin trends, cost trends and ASPs), and sales. Quantum has said that it has not revised it's guidance on sales or earnings - per when I talked again to IR on Friday.

True to form, the analysts had probably been warning their institutional clients to dump HDD sector stocks prior to these revisions. So by the time the revisions come out the damage has already been over-done.

These cuts are more than I expected and have been made in a climate of fear.

Why has Quantum now started moving up despite the "bad news" of recent earnings revisions and the minor donwgrade by one brokerage? IMO it's becuase by the time you see the recommendation the institutions and large investors have already gotten out, maybe at a higher price. This bad news has already been more than adequately factored into the price of the stock. The anouncements last week that WDC would scale back production could also help to reduce further price pressure in the desktop market.

The price targets, recommendations, and even the lowered earnings estiamtes make QNTM an attractive buy at the current price. The TA of the charts look like a posible breakout.
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