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Technology Stocks : Western Digital (WDC)

WDC 181.95

+7.3%

Dec 10 3:59 PM EST

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To: MJR who wrote (7379)	11/11/1997 1:42:00 PM
From: ptrader	Read Replies (2) of 11057

Investors in WDC should be very careful. I have seen this cycle in the disk drive industry many times. I was involved with Al Shurgart when he started "Shurgart Technology" (now Seagate Technology) in the early 80's in Scotts Valley. This is what I would expect over the next few quarters: - A continue of the price war that started last quarter. This was brought on by Seagate pushing more drives into the desktop because of weakness in their high end business. - Drive companies will continue to build too many drives which will translate into lower prices. - Drive companies will only cutback after they reach large losses. - This cutback will cause inventories to shrink. - Price stability will occur. This cycle takes about 4 quarters to go full cycle. Thus, starting last quarter, the drive industry will not come out of this slump until next summer/fall. I also would expect WDC to post a loss for the next two quarters (after this one).

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