John,
Well, you are more optimistic than I am. This company, and much of the sector, nearly every company except for QNTM for that matter, has gotten MEGA downward revisions since August, and especially over the past few weeks. I haven't seen anything like this since ASND, which is similarly in the doghouse.
Sure WDC may bounce around in a trading range of 20 to 27 over the next three months. Beyond that, it gets harder to tell, but the revisions did extend out through the whole year and into the next fiscal year. So $40 by the end of 1998 seems very optimistic to me.
Of course, all the companies in the sector could get together and agree on a truce. But is that likely to happen? Have the Asian companies launching the most recent assault been in on those kinds of agreements in the past? I don't think so.
There are clear signs of lots of overcapacity (the price war) and until a supplier closes down, what is going to change that, short of another implicit price agreement? Nothing. These things are hard to predict. But clearly, $30 before next summer is highly improbably. And $35 by the end of the year is also unlikely.
That's my best call for the moment, but things could change, of course, overnight, if capacity is taken off line or some sort of implicit price agreement is put in place once again.
Meantime, there are certainly MUCH better investments around than WDC. And anyone with dead money still in this stock should just take it out and move it into any of the many other great stocks out there right now, and enjoy the ride up with them. You can always buy WDC back three months from now for more or less the same price, if you are wedded to the stock for some reason.
Happy Investing!
Fanni |
