Sarmad,
FWIW, here is an assessment on STX from a guy on the STX Yahoo board that I used to read years ago when STX was SEG. This guy always seemed to make sense to me then. Since I haven't been following the Yahoo DD boards lately (I have no idea why I went there last night except perhaps for boredom and a few idle moments), I have no context to give you for the post, I post it simply as an interesting read to consider. Though my own guess (and current "bet") is that he is right about STX low-balling the synergies that they will get from the Maxtor merger. Those guys will do anything and say anything for a buck. First class thieves, IMO.
Re: MBAPhd82 What do your think?
by: mbaphd_1982
Long-Term Sentiment: Strong Buy 01/21/06 12:16 pm
Msg: 26713 of 26797
Well its been a long time, but despite my personal disdain for the bank games we have been witnessing in the drive space, I still follow the group.
Give credit to my old nemesis, the golden boy, Stephen Luzco, for spending the big bucks on R&D and STX's successful entry into the new markets. However, STX still suffers from a high degree of politics in its middle management ranks which continues to hurt the company.
Conversely, the ruse WDC has played with investors over its head development status, is finally coming to light. I would not be surprised if WDC hooks up with someone like Fujitsu to offset the major strategic advantage that STX now has! Word is that WDC is considering or may be actually dumping out of some its new programs that overlap with Fujitsu.
The big stockholders of both STX & MXO are not eager to cash in on their recent gains and some of the big funds are back rebalancing their storage investments from flash memory back to drives. The major bank "analysts", who are now positive(LOL!), put out low ball valuations for STX last year in what I believe was a coordinated SCAM to hold the price down. In 1996 STX earned $2 and the stock ran to $43, in 1997 STX posted $3 in earnings and the stock hit $56. You do the math, but STX will post $2.09 this year without Maxtor. Word is that STX management has been low balling their estimates for how accretive MXO will actually be!
Remember the bump up WDC got when it started using heads from its own fab, same logic now applies to MXO when STX integrates its heads and media into their drives and improves the quality, which will lower MXO's high warranty costs which are still double those of WDC! BTW, STX only included Opex cost savings in their estimates for the deal and did not factor in the savings for using their parts in Maxtor drives, which will be considerable.
I had to laugh at some of the hedge funds, some of whom are thought to be smart money, in their bumbling attempt over the last year to short Komag. IMHO, couldn't happen to a nicer bunch. BTW, media will remain in short supply through most of this year.
WEll, Ranger, that's all for now.
Live long and prosper!
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