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: Z Analyzer who wrote (8268)	4/17/2000 1:19:00 PM
From: Mark Madden	Read Replies (2) of 9256

Z - We have seen a summer slowdown for the past couple years but some years it hasn't happened. Maybe this will be one of those years when new factors hold the drive business strong. The summer slowdown in Europe usually give us declining demand in the computer industry. Maybe it will be offset this year by the large growth occurring in Asia. SEG reported a major increase in Asian sales last quarter. Also we have these new demands emerging. Set top boxes are not big yet but broadband communications is really expanding fast. Here are some figures from the Last Mile thread. Message 13435128 In the U.S. there are about 0.6 million DSL installation at the end of 1999 and an estimated 2.0 million at the end of 2000. They are being installed as fast as equipment and trained installers will allow. DSL is only part of the broadband growth. I understand cable modems are growing about as fast as DSL and wireless broadband solutions are just beginning to come on line. These solutions that are more than 20 times faster than dial-up modems can fill disk drives quickly. As areal density reduces the cost of drives, the pricing or demand must go down to reduce margins. We would think the pricing and demand would coincide. Our monitoring of pricing should give us an early warning if margins are to drop this summer. Another variable in margins is the mix of drives sold. SEG mentioned the increase in Asian sales gave them lower margined units. Hopefully this will be offset by the higher margined trend noticed by Maxtor. The broadband driven demand is likely larger capacity and margined drives. Regards, Mark

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