Can this thread sue Fortune for plagarism?
pathfinder.com@@YNCdvQUA3ickIcbE/fortune/1997/971110/ten6.html
FORTUNE TEXT EDITION
November 10, 1997
EVEN IN BOOM YEARS, REMEMBER: DISK
STILL RHYMES WITH RISK
In theory it all sounds so good.
PCs powered by Pentiums and
Pentium IIs require faster hard-disk
drives that store more data. Disk
technology improves at a more
rapid rate than Moore's Law.
Corporations double the amount of
data they need to store every three
to four years. And while a decade
ago the market for computer hard
drives was split among 60
manufacturers, it seems to have
shaken out and stabilized, with
eight companies of any size and just
four that matter. Seagate,
Quantum, Western Digital, and
IBM accounted for 79% of the
disk drives sold last year. Says
IDC storage analyst Crawford Del Prete: "The market has learned from its mistakes." It all adds up to a safe bet, right?
Nonsense, says Seagate CEO Al Shugart. "I don't think anything has
changed," he told FORTUNE in October. "There are just fewer
people to muck it up." Minutes before, he had announced that in the
quarter ended October 3, Seagate had lost $240 million on sales that
were down 8%, to $1.9 billion. The share price promptly fell $6.81,
or 18%.
Like chipmakers, hard-drive companies have high fixed and low
variable costs--plants are expensive, but each extra hard
drive is cheap to produce. And as in chipmaking, everyone tends to
scale up production during good times and flood the market. Over
the past few months prices have plummeted. IBM's renewed focus
on disk drives has intensified Seagate's woes. Two years ago Big
Blue was scaling back: Now it's a leading maker of storage for
laptops as well as mainframes.
Investors leery of Seagate might like Quantum and Western Digital.
Quantum has a lucrative business making magnetic tape for archiving,
the source of half its profits. It and Western have built close ties to Compaq and Dell by dovetailing production with the just-in-time
demands of those fast-growing PC makers.
-- Michael H. Martin
<<<<<<<<<<<<<<<<<<<
A very nice, clear article that
1. steals ideas from this thread published months ago on why the disk drive sector is a good bet (increasing storage needs; fewer disk drive companies means less competition)
2. a beautiful, simple, real-world example that shows how much ideas can be worth--
In this brave new world of endless and expanding profits for drive makers, SEG posts a $240 million loss and Shugart explains the loss by saying >>"Nonsense. I don't think anything has changed," he told FORTUNE in October. "There are just fewer people to muck it up."<<
And then the article gives a simple, brief explanation of the cyclical nature of drive stocks (that was supposed to be history, as recently as one or two weeks ago, according to many posters on the drive stock threads).
-LK
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