Disk Drive Sector Discussion Forum Message Board

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Technology Stocks : Disk Drive Sector Discussion Forum

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To: La Traguhs who wrote (6779)	7/13/1999 11:15:00 AM
From: Robert Douglas	Read Replies (2) of 9256

Notes from Bear Stearns on disk drive players: <<Disk Drives. The desktop segment of the disk drive business is lousy, as reflected by the pre-announcement of every drive company and component vendor. But, in our view, the dynamics are changing with Fujitsu and IBM taking a bigger role. Moreover, something has to give in the next quarter or so for the weaker vendors given the precarious nature of their and their component suppliers' balance sheets. Quantum (July 22) - the near-term catalyst for Quantum, as we have noted elsewhere, is the creation of the two tracking stocks QHDD for disk drives and QDSS for tape drives and storage systems. In our view, one can say that investors are getting the disk drive business for free (although some battle-scarred investors might say you would be overpaying at that price) or that you are paying 10x earnings for the tape drive business. Seagate (July 15) - the good news is that Seagate has improved its time-to-market, but that has been bad news for its competitors, especially given its strong position in the high-end. The key issue for Seagate is to take steps - like we saw at Quantum - to unlock the value at the company. Given the background of the CEO, we are certain that the wheels are turning. IBM 2Q99 results should be solid, owing to easy hardware comparisons and strong services sales, but the disk drive and DRAM business could pull in the other direction.>> What do you suppose he means by "something has to give"? -Robert

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