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Technology Stocks : Seagate Technology - Fundamentals
STX 304.01+6.9%3:59 PM EST
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To: Stitch who wrote (1373)3/4/2000 9:01:00 AM
From: Robert Douglas  Read Replies (1) of 1989
 
Hi Stitch,

Are we on the cusp of an incredible renaissance in storage where margins come creeping back?

I am leaning toward saying yes to your question, at least the part about renaissance in storage. Margins are trickier to predict. They are what economists call the residual. You have a bunch of large items above it in the income statement and whatever remains at the bottom is profit. Hard to predict? Absolutely! A couple percent here and there in pricing and in costs makes the difference between lousy margins and good ones.

Will disk drive companies be able to take a piece of the storage profit pie or will it all go to the software, systems or retailing guys? Recent history doesn't paint a pretty picture but I'm not convinced that the recent environment for DD makers is the model for the future. So I would expect margins to "creep back", as you said, but would not be surprised if they roared back either. Or for that matter remained negative for years to come. How's that for indecisive?

As always, the questions Z poses concerning the long-term value in Veritas remain the toughest for me to answer. I posted when the value of VRTS passed GM which was 10 or 15 percent ago. New economy or new mania? I think the odds favor the latter.
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