Sarmad,
"And the occasional laggard, Seagate, has made equally impressive amounts of money."
[note: this is a bit of a rant; mostly OT to WDC]
When they were SEG, STX didn't make "impressive amounts of money." What they had were impressive amounts of writeoffs. Quarter after quarter. Sometimes it had nothing to do with the business as such--when Thailand devalued the baht, for example, SEG got caught essentially gambling with the dollar, and had a gigantic writeoff (that started the Asian flu a few years ago, you may recall it). Other times it was just restructuring after restructuring. In fact, the guys who now run the company hardly had a quarter when they were in control when there wasn't a writeoff.
My point in writing this is this--don't trust those guys. While I haven't looked at their financials since they came public last year, I believe I have read that (a) their tax rate is abnormally low (I think the low teens), and will be for a short while till it goes back to the 30s like normal countries, and (b) my guess is that all the writeoffs they took are still being felt in how they report their results. They are, for sure, experts at financial manipulation. They essentially stole the company three years for nothing, touting the wonderful advantages they would have as a private company in this business after they themselves partially destroyed it by engaging in cutthroat pricing (in order to get the company cheap, IMHO), and then lo and behold, two years later those wonderful advantages of being private weren't even mentioned, at least not in the press releases I saw.
I even think that they and their bankers are behind the revaluation of the DD industry right now. They are still holding huge amounts of stock (80% before their recent offering of part of it). They will be selling all the way up. When they are down to their last 15%, look out. It may well be the last legs for this revaluation.
gotta go,
Sam |
