QUANTUM Message Board - Msg: 2839454

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Technology Stocks : QUANTUM

QNTM 8.585

+11.6%

3:59 PM EST

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To: jcashin who wrote (5811)	11/29/1997 11:54:00 PM
From: Henry W Singor	Read Replies (1) of 9124

From This weeks Barrons. >Intel. The chip giant revamped its operations into four sectors: consumer products, small business and networking, business platforms, and "digital imaging and video." Keep in mind, too, that digital photo files tend to be large -- widespread acceptance could boost demand for high-capacity storage. Also UPGRADE Quantum (QNTM-NNM) by Sands Brothers (25 3/4 , Nov. 13) We are upgrading our recommendation to a Strong Buy, based upon the strength of the company's Digital Linear Tape business unit, its superior competitive positioning regarding its transition to MR head technology and the compelling valuation of its shares. We believe Quantum's current stock price already reflects an overly negative sentiment, at a time when investors are increasingly uncomfortable with owning shares of hard-disk-drive manufacturers. I've been looking at this too. The DLT division has sales per share of about $8 and earnings of (I'm guessing on earnings) about $1.20. The division is growing at 100%/yr now with a long term growth rate of at least 50% for the next couple of years. So if you very conservatively value a fast growing business with a proprietary product and no competition at 3X sales and 20 times earnings you get that the DLT division alone is cheap at $24. Second QNTM's Bigfoot drive has no competition (no-one else makes 5.25 inch drives for the desktop) Qntm is shipping about 6 million of these bigfeet a year now so they represent 25% of it's hard drive production or about $1.2Billion per year. Value this $7/sh contribution at 0.7X sales and you get $5. Next the 3.2Bil/yr 3.5 inch business could be valued at a Price/sales ratio of 0.4 to add another $8/sh. Whopping total $37. From an absurdly pessimimistic analysis. Excuse me for the crude analysis but it really is a no brainer to find $26 worth of value here. Henry

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