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Technology Stocks : Disk Drive Sector Discussion Forum
WDC 153.96+0.7%3:59 PM EST
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To: Tom Simpson who wrote (7624)12/27/1999 5:58:00 AM
From: Z Analyzer  Read Replies (1) of 9256
 
<<The weighted average desktop drive dropped at the monthly rate of 0.6% since the beginning of this quarter.
The average SCSI drive price dropped at a monthly rate of 2.7% since the beginning of the quarter. For the two
years preceding this quarter the average disk drive price dropped about 5.0% per month. >>
So, if we estimate that a price drop of 12% per qtr results in margins which neither increase or decrease, desktop margins should be 10% higher exiting this qtr than at the beginning averaging 5% higher for this qtr. A second qtr of stable pricing would add an additional 10% (with 5% caarying over to the next qtr)easily restoring normal profitability, which is way too much to ask for. Even resuming a 12% drop next qtr would allow the second 5% increase to be realized, getting profitability to breakeven or better. But then the summer follows and ruins everything unless demand is extraordinary. -Z
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