<<What do you think of this wishful-thinking scenario?>>
Wishful thinking.....unlike the Taiwan incident, there is no real impairment of disk supply capacity.
<<Actually, I don't think production can be increased easily from its current level.>>
I'm only guessing, but in doing so I would disagree with both your logic and the conclusion of the logic. The reason capacity (measured financially) has gone down is due to huge write offs, normal depreciation, and a choke on new capital spending. What it really means is they had no need for all of the manufacturing floor space, equipment, and human capital present to produce x units so they took a charge against those prior investments. A big part of the reason they didn't need it is that each unit has fewer platters, heads, connectors, etc taking less manufacturing resources (capacity). But a chunk of that space and equipment is still physically sitting around idle and, to the extent its not out of date yet, still available for production use.
But this is actually good news because should unit demand take off there is probably practically no added capital required to satisfy it and most of that incremental revenue drops right to the bottom line......for a while anyway.
As I see it now, the real problem for the drive makers is there just isn't currently quite enough growth in unit demand for PC's and appliances are not yet a real factor. This condition will change but its tough to see it in a quarter.
Longs have to be patient.....sometimes excessively patient :o)
Tom |
