<<And if Seagate's high-end profitability deteriorates, where does this leave Seagate overall?>>
Z. I think you have to take it one step further and ask to what degree will profitability deteriorate. If the high-end market becomes like that of the desktop, then Seagate has big problems. I don't expect this. There are too few players in this segment and they are much more sophisticated than the table-scrap-fighting, low-end bunch. As an investor in both SEG and QNTM, I fully expect both to achieve good profitability in the high-end.
<<Every one seems to be a love with Seagate now.>>
I don't think there are many investors in love with any of the disk drive stocks, including Seagate. The valuations at these levels just do not reflect any amorous feelings. Subtracting out the value of SEG's non-HDD business ($15/share) reveals that the disk-drive business is selling just above one-half of sales. For QNTM, factoring out its DLT business, you find similar, if not cheaper, valuations. This, IMO, is at the low-end of valuation, implying that the market is sufficiently cautious about the future. If the future surprises, then there is plenty of room for upside.
-Robert
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