Kevin,
Seagate doesn't have a majority stake in VRTS, though it is a major stake (41%). Also, they issued $700 million of debt of various maturities a couple of years ago, some of it of the 40 year(!) variety. I just can't see them issuing more debt at this point. There is no need for cash right now. Unless they think that this war is going to be a lot longer than I think it is. I think it will last 3-9 months, 12 at the very most; if something like this kind of pricing persists through the seasonally strong period in the autumn/winter, then by this time next year at least WDC will be gone, and Samsung and even Maxtor will be in big trouble, IMHO. Seagate and QNTM both have the cash to easily survive that long, and QNTM will most likely still have positive cash flow, presuming the SDLT transition goes reasonably smoothly, which I do presume. QNTM also has the advantage of being a little more flexible in their production plans, since they don't have to deal with the same production overhead that the others have. MKE will have to share the pain, if there is any. Perhaps Panasonic, Replay and TiVo can pick up a lot of the slack capacity.
We'll see. It is "interesting", as long as your livelihood doesn't depend on the sector.
Regards,
Sam |
