Disk Drive Sector Discussion Forum Message Board

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Technology Stocks : Disk Drive Sector Discussion Forum

WDC 152.20

-3.7%

Nov 4 3:59 PM EST

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To: Sarmad Y. Hermiz who wrote (8263)	4/17/2000 10:42:00 AM
From: Z Analyzer	Read Replies (2) of 9256

<<To answer your earlier question regarding WDC as an investment. If WDC achieves the same cost reduction in Q2 as Q1, they'll make $4/drive profit. if by the end of the year they get an additional $6/drive in cost or price or mix adjustments, that will be $10/drive in net profit. At 25 million units, that's $250m. At a P/E of 20, that will fetch $5B in market cap, or $30 to $40 per share. >> Teh flaw in the logic is that the other drive companies would become wildly profitable in your scenario and not step up production. Not likely, esp during the summer when gross margins almost invariably fall. -Z

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