Disk Drive Sector Discussion Forum Message Board

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Technology Stocks : Disk Drive Sector Discussion Forum

WDC 157.75

+0.4%

Nov 14 3:59 PM EST

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To: Z Analyzer who wrote (7215)	10/14/1999 1:18:00 PM
From: Mark Madden	Read Replies (1) of 9256

"Does anyone share my suspicion that SEG is using profits in the high end to subsidize the low end while WDC dies?" Z, I share your suspicion. We know enterprise drives have high margins where Seagate claims others can not compete well. However, on the bottom line, Seagate sold 9 million drives for $2 million net profit ($0.22/drive). Pricing below costs likely pulled the average down. This may be one of the reasons Seagate does not break down profits into segments anymore. IMO the only other answer is high costs. The costs could be high because the "efficiencies" amount to the expensive process of replacing people with automation machines (robots). This would account for more drives with fewer people. It may also account for more inventory turns because machines work 24 hours a day. Either strategy will likely keep the low profit margins over the short term and give them advantages next year. Regards, Mark

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