Sarmad,
At the end of the day, we will see price stability and some measure of profitability if the major participants want to achieve it. I continue to believe that the price erosion that we are seeing is consistent with increasing profitability for the DD makers as the year goes on because Seagate in particular wants it to be so, and that the damage we saw last year was part of their "master plan", i.e., make the industry unprofitable so that they could "steal" the company with their LBO, then slowly lead it back to profitability and take the company public again for huge profits for themselves (i.e., Silver Lake, Texas Pacific, SEG management, and a few of the investment banking participants like Morgan Stanley, SSB, et al). I continue to believe, too, that WDC and MXO will be teenagers (at least) before it is over, and that the Master Plan will be a huge success for these people, they will make billions in return for their patience, perserverence, and execution. The only ones hurt will be the stockholders of the respective companies who held during the swoon and sold near the bottom.
And no one will go to jail. In fact, they will all be feted for their genius to buy low and sell high. The only thing we can do is try to catch the upwave and make a few pennies with them. For the moment, WDC seems to be the better investment, as Maxtor continues to sort out the HDD merger, but at some point MXO, if they execute, should appreciate nicely as well. As it is, WDC is rapidly approaching MXO in terms of market value. The only wild card in this seems to me to be Samsung, and I think that they are too busy with the DRAM mess that they have helped to create to do anything about it in the near future.
Best wishes,
Sam |
