Disk Drive Sector Discussion Forum Message Board

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Technology Stocks : Disk Drive Sector Discussion Forum

WDC 236.39

-2.8%

Jan 23 9:30 AM EST

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To: Tom Simpson who wrote (7859)	1/29/2000 8:26:00 PM
From: Sarmad Y. Hermiz	Read Replies (1) of 9256

>> I suspect that some of this inventory improvement reflects push backs on to component suppliers just as the box makers pushed theirs back on to the drive suppliers. << What do you think of this wishful-thinking scenario? If we look at the result from the memory shortage after the Taiwan earthquake, PC makers responded by reducing the amount of memory in the standard config. So the default became 32MB and you paid extra for above that. However, that game cannot be played with disk drives. Either Mr Dell pays an extra $10 or $20 dollars for a drive, or he doesn't get to ship the $2000 system. But of course it depends on the contractual agreements bet DD makers and box makers. I imagine that box makers have been ruthless in exacting blood from WDC, etc.... I hope that the disk makers will play as tough now that the balance is swinging the other way. Actually, I don't think production can be increased easily from its current level. If the value of plant and equipment is an indicator of capacity, then there was a significant reduction there, too. The total for WDC, MXTR and HDD went from 555m a year ago to $440 currently. SEG did not report that figure this time. But they've had two 10% reductions in the past year. So their capacity is also shrunk. So if demand keeps increasing and new applications in video and music become popular, I don't see how disk prices can drop. Warning: some of the foregoing might be wishful thinking brought on by a large long position in the DD stocks. -Sarmad

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