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Technology Stocks : Western Digital (WDC)
WDC 174.60+1.5%3:59 PM EST
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To: Pierre-X who wrote (7520)11/12/1997 7:26:00 PM
From: Herb Melcher  Read Replies (2) of 11057
 
Pierre- you summarize the pros and cons pretty well. I have been in and out of both WDC and APM several times this summer and fall. Luckily I was out of each when recent sharp decline began. I bought back into WDC late this afternoon at $19 3/4. Nobody knows whats going to happen with respect to competitive pressures, pricing, etc. but I have faith that WDC will rebound because:

1. Most important - excellent balance sheet, have resources to weather the storm.

2. They are forecasting $.20 to $.30 in coming quarter (before possible charges). I am betting they will make their forecast and improve somewhat, possibly slowly, over the following quarters. I think they have an excellent chance of earning $1.50 or more in next four quarters, with lots of potential beyond that which should give then a PE of at least 15. I don't think they will go much lower.

3. Demand for drives is strong, and in my opinion is likely to remian strong.

4. WDC is a low cost, highly efficient producer, although may be encountering temporary problems transitioning from TFI to MR.

5. WDC has a reputation for quality products and good service. I can't see name brand box manufacturers putting a lot of questionable quality drives in their boxes just to save a few bucks. I think the Fujitsu threat is overblown.

Analysts opinions are little more than guesses at this point. Use your own instincts. Good luck.
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