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Technology Stocks : QUANTUM
QNTM 10.60+5.1%3:59 PM EST
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To: still learning who wrote (5722)11/26/1997 3:26:00 PM
From: Z Analyzer  Read Replies (6) of 9124
 
I've posted it here til I'm blue in the face, but I'll do it again. If someone feels there is something conceptually wrong with this analysis, please let us know.
It makes no more sense to apply a dsk drive multiple to all of Quantum's earnings than it would to apply a DLT multiple to all of them which at 30 times would get you some thing equally rediculous like a $90 stock. Logic says to apply a disk drive multple (I use 11) to DD earnings and an appropriate multiple to DLT earnings (I use 30). Add up the valuations and divide by total earnings to get the blended multiple. Using my multiples, based on Sept earnings annualized, results in a value of $47 for DLT and $9 for disk drive (too low since heads and highend are losing big money). This methodogy results in DLT accounting for 83% of Quantum's theoretical value and a blended P/E of 23. The only significant remaining questions are exactly what multiple the market would place on DLT (probably 25 to 40) and whether Quantum management will ever decide to separate DLT to unlock the $4 billion in understated shareholder value. This value is lost, as many on this thread so beautifully demonstrate, because Quantum is still regarded as a disk drive company despite 83% of its value being DLT.
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