I really don't have a fixed expectation on earnings - other than GAAP could be near zero or negative. I think in the filings they made prior to the close of the MXO deal, they had estimates starting at $500Mill in writeoffs (especially given that MXO had ~$490Mill in Goodwill that goes to zero). But I think that has to be factored in by the smart folks - they know it. But I expect that some shorts will try to scare people, so get ready.
And unfortunately, their gross margins may look like crap as well.
But the important numbers will be market share - how much are they keeping? (NOTE: I expect them to give the standard line regarding this qtr - seasonal norms). Anything better than 60% should be positive, anything better than 75% should be outstanding. And I think they have a really good shot at that 75%+. The numbers just don't add up at WDC and HIT (nor Samsung - I guess). Let's take a guess at two segments from MXO:
Enterprise - MXO was last at 973K. HIT increased 100K. If you assume FUJ did the same, then that means STX kept ~79% (assuming flat shipments).
Desktop - this is the one that really matters. MXO was last at ~10Mill DT (12.1Mill total minus 973K Enterprise & 1.2Mill CE). In the 1st qtr, I calculated a total of ~45.9Mill DT drives sold (STX, MXO, HIT, WDC), with STX & MXO at ~27.4Mill. Assume for the moment that total DT sales were down 5% in 2nd qtr (I think that's high - last year was ~2%). So that means total DT should be ~43.6Mill, and with NO share loss STX/MXO would be ~26Mill. So far, WDC reported ~12.7Mill DT, HIT 5.7Mill. So that leaves ~25Mill for STX/MXO, which is retaining 96% of the combined. If you assume all the share loss came from the MXO portion, then STX is keeping ~90% of the MXO DT.
OK - so I ignored Samsung in the above, which along with HIT, everybody was blaming for the 80GB price collapse in June. If you assume STX kept only 75% of MXO DT, that means Samsung would have had to ship 1.5Mill MORE DT drives in the 2nd qtr vs 1st qtr. No way. HIT only increased 600K.
OK - I've also ignored the MXO CE shipments of 1.2Mill drives. That's really hard to figure out. But I doubt that dropped to zero, and probably followed the same trends as the others.
Bottomline: I think STX is keeping more than 75% of MXO market share.
I guess we'll know in about 8 hrs if I'm FOS. |
