Hi Herb, my take on your take <g>:
>2. They are forecasting $.20 to $.30 in coming quarter (before >possible charges). I am betting they will make their forecast
I agree, I believe Haggerty and co are smarting from two misses, and have intentionally depressed current quarter expectations to an achievable level. It is my HOPE that this will bounce the price and give me an exit window.
>improve somewhat, possibly slowly, over the following quarters. I
I disagree here. Historically HDD companies have gone deeply into the red during periods of oversupply, with some players exiting the industry. Recall that WDC themselves have been near bankruptcy. (!)
>3. Demand for drives is strong, and in my opinion is likely to >remian strong.
Demand is indeed strong, I think most parties are agreed. But that's not the issue. Overcapacity = supply outstripping demand. It only takes one side of the supply/demand to falter for an industry to take a beating.
>4. WDC is a low cost, highly efficient producer, although may be >encountering temporary problems transitioning from TFI to MR.
The question is, will they be able to maintain efficiency going forward? Since WDC is not at all vertically integrated, their cost functions are significantly determined by efficiency of suppliers, such as APM, RDRT, KMAG. APM/RDRT is a trouble spot, and may impact their cost efficiency. We have to factor in that uncertainty into our gut valuations. This is where I'd like to see an RDRT expert remove some of that uncertainty. Will they be able to deliver enough MR HSA's or not?
>5. WDC has a reputation for quality products and good service.
So did Micropolis. Didn't help them.
On the positive side, tomorrow at the meeting I hope to discover the feasibility of "leapfrogging to GMR" as a strategy for WDC. Given IBM's very low forecasts of unit sales however, it seems unlikely.
Pierre-X
(Looking for a good reason to hold my huge WDC position.) |
