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Technology Stocks : Western Digital (WDC)

WDC 176.34

-5.8%

Dec 12 9:30 AM EST

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To: Chi Pan who wrote (7511)	11/12/1997 4:57:00 PM
From: John Wang	Read Replies (2) of 11057

<<Book Value>>Book value comparison may be a good theory to explain why SEG is more resistant to this down draft due to WD earning pre-warning because SEG is already trading at below 2X book value. That does not mean that WD have to trade at the same book value multiple. Book value is only one of many measurements to assess the stock value, which I think you will agree. Book value is probably a very good measurement for companies producing repetitive stuffs like Oreo Cookies that don't really need to re-vamp technologies all the time. A lot of high tech companies have values on top of book value. The values are dependent on the PRODUCTIVITY. One famous name MSFT has >15X book value. Dell is at whopping 22.36, CSCO is at 13.24, CPQ is at 5.43. WDC and QNTM are currently near 3. How do you measure productivity? Not a simple question. But, compare ROE, ROA, Inventory turn, etc. You'll see WDC has very distinct advantage over SEG: www1.wsrn.com www1.wsrn.com I am not saying that WDC may not go down to 2X or below. It is a crazy market today. I am not going to stand up and predict the bottom for this stock. Anything can happen if it is disk drive stock or tech stock. SEG probably will be in the red this quarter. Will WDC be in the red next quarter? None of the analysts' estimate showed that. Personally, my guess is that it may not and its worst quarter may be this one or next based on their products in the pipe line and the degree of pricing erosion in the next quarter. Again, I want to say that this is my guess. Hope you agree that book value is not the ONLY thing. I think market psychology is the ONLY thing that counts now. Regards :( John

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