Sam:
I agree that DLT is our gem. I too like the $40/share valuation.
What really confuses me about QNTMs current business plan is of course High End and Recording Heads. Since I started following this company in July of 1996 (good time to buy), these two aspects of the business have been AWFUL. At best, 4FQ97 I believe, the High End was making only "positive gross margin contribution". And heads have been worse, they have lost something in the neighborhood of $75MM over the last 4 quarters. Now, while the technological advantage has its merits, paying that much is not justified.
In my opinion, the desktop environment is much the same as it was last summer. It is QNTMs main revenue generator, but there are concerns about channel inventory and pricing. Heads and High end have shown little significant change. With these things looking much like summer 96, QNTM should be trading at right around book value. But, the HUGE difference is that the street HAS recognized some of DLTs value, just not nearly enough.
What can be doneby management to eliminate the chaff (Heads / HE) and focus on what QNTM does well, design great desktop drives, and design and manufacture the best tape drives in the business.
I know you know all of this, but I think we are nearing a low, and want to cover all of the bases before I buy.
Continues Best
BuySide |
