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Technology Stocks : Disk Drive Sector Discussion Forum

WDC 164.25

+2.6%

1:03 PM EST

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To: Sam who wrote (9111)	4/17/2002 7:35:56 PM
From: Sarmad Y. Hermiz	Read Replies (1) of 9256

Well, my expectation for WDC to gap to 8 did not materialize. But I managed to sell a few at 7.48 before it retraced. excerpt from one of the stories. " ....... the joint venture will combine selected Hitachi and IBM disk drive assets, including employees, facilities and intellectual property. " My response yesterday (which is as worthy as yesterday's newspaper now). I see this as extremely positive for wdc. I assume the desktop drives will be eliminated. Hitachi is strong in enterprise storage and small size. They do not do desktop. Of course, wdc, with their newly purchased facilities in Thailand can fill the void from IBM very well. It is all coming into place nicely. I had been very puzzled at the rise in wdc and mxo stock the past few days. There just was no explanation. Until now, that is. Someone knew of IBM exiting the disk business, and is interpreting this very positively. Otherwise how to explain the 8 m shares traded in the past 2 days ? I think wdc will gap to 8 tomorrow. And the shorts panic will take it to 10 in a week. Good luck longs. And the shorts always like to short from a higher price level, anyway. I think they'll get it tomorrow. A rough calculation shows that Hitachi will (might ?) pay $1B for 40% of the IBM business that had $3B to $4B of sales. Assuming that both IBM and Hitachi start out with equal disk businesses. I calculate that Hitachi is paying a price to sales ratio of 0.8. That makes WDC's sales ($2.4B/yr) will be worth $11/sh as the stock price. Regards, Sarmad

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