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Technology Stocks : Disk Drive Sector Discussion Forum
WDC 157.11-5.4%3:59 PM EST
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To: Mark Madden who wrote (8158)3/26/2000 12:13:00 AM
From: Sarmad Y. Hermiz  Read Replies (1) of 9256
 
>> Wouldn't it be nice if people knew a faster disk drive would save them more time then a faster processor, for much lower cost.
<<

Mark,
It is the fault of the DD makers that they do not direct their marketing to end users. The box makers don't disclose what disk brand or model they use (except HP which is all Quantum). That way they retain the flexibility to punish any DD maker who doesn't subsidize them.

But on a more immediate subject. The estimates for WDC for the March Q were raised from -50C to -30c. Is it reasonable to expect that WDC will lose over $45 million this Q, while the other DD companies all make profit ? I am estimating that WDC will come very close to break-even, and therefore I expect the stock to rise sharply by end of April. But a $45 million loss could sink the stock to under $5/sh again.

A more optimistic spin is that analysts are not closely looking at the DD business yet. So the estimates are just plain wrong. For example, the estimate on Maxtor was -30c until the day that Maxtor pre-announced a small profit. WDC stock price is behaving very well the past 2 weeks. So maybe the brokers will not change estimates until they are done accumulating shares.

Should be a suspenceful 4 weeks.

edit. To break even, WDC needed to improve their gross margin by $10/drive. Since prices did not rise, the improvement would have to come from a better mix, or from cost savings. I wonder if this is an impossible mission at this time ?

Regards,
-Sarmad
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