Luczo gave a presentation at a conference today. I haven't had a chance to listen to it yet (should be up on their web site now or soon, but I'm too tired right now), but here are notes on it from a Yahoo poster who is a long time follower of the company. If you don't want to read it all, suffice it to say that it is very, very bullish, despite the fact that the stock went down in the afternoon after the presentation was over. I think that had more to do with Mr. Market than with the company. Luczo, of course, is a Wall Street guy, and knows exactly what they want to hear.
Here are Luczo's comments at Today's Weisel Conference
Industry will be chasing demand thru 2010 and possibly into 2011 if there is some growth in 2011.
Sees 2010 TAM of 650-670 M units in 2010. Sees 1 Billion drive ships in 4 or 5 years.
Parts shortages pacing ramp. Laptop substrates are currently short, finished media becoming short next quarter, head shortage seen late 2010.
Japanese component suppliers hesitant to invest capital for manufacturing capacity. Very risk adverse.
Benign pricing seen in 2010, last quarter price erosion was 3%. Customers concerned about availability, not pricing. Customers discussing 1-2 supply agreements, pricing is their secondary concern.
High margins last quarter were more due to mix.
Margins should stay high due to demand chasing supply in 2010. Due to shortages, PC firms mixing up which should help STX margins.
Server refresh cycle is definetly underway, Luczo sees PC refresh in 2H10 along with a pick up in large storage systems.
STX levering platform strategy into manufacturing efficiency improvements.
Due to (head) capital investment strategy, not technology, STX fell behind WDC in areal density two years ago. STX has basically caught up.
STX now sold out on 7200 rpm laptop drives, January 2010 was STX' best month ever. STX sold out this quarter. Sees more benign pricing in June quarter.
SSDs seen as decent business in 4 or 5 years.
TDK/WDC facing head capacity constraints.
STX outsources 10-15% of heads and media.
Luczo wants to reduce debt to $1.5 B from $2 B, reduce sharecount to 500 M, keep cash at $2 B. Maybe reward share holders in the long term? |
