<"We are currently shipping pre-production volumes of HIFs ahead of schedule and it appears that our customers are on schedule with their production ramps. We expect shipments to increase dramatically during the second half of fiscal 1998 and we need to have the capacity to produce a minimum of 2 million HIFs per week by January 1, 1998, 5 million per week by July 1, 1998 and 10 million per week by January 1, 1999," said Haley.
This is from April release last year, but imagine going from 2 million per week to 10 million per week.>
Good ramp, but remember that this will be canablizing current sales of WAT products. Also, it will be geared toward aceptance of HIF vs TSA. This makes the SEG announcement pretty strong, but then I've also heard, without confirmation, that Quantum is using TSA. Theoretically, all the manufacturers will accept both interconnect systems and then it will be a question of who is first and second source. Problem is they have different methods and equipment for bonding. They have to buy new equipment, gold ball bonders for TSA.
< That equates to a pe of 16.6 and a price of 46.6. The key issue here is future growth beyond the coming fiscal year. >
Beware of setting high targets on PE formulas. It just doesn't apply to INVX. Look at APM. Had a PE of 4. The stock has since fallen 50% and earnings going from several dollars a quarter to a near loss. Now, where's the PE? You could say the same for WDC.
INVX is in a stronger position IMHO, but still, it is subject to the same fears.
The question of future growth is pretty big. I think INVX will make the transition and continue to carry a significant portion of market share, but it is a question. As far as MR growing, the big growth is past. It will not have the same impact in 98.
Future transitions are involving the size of MR heads, but the number of wires will remain the same. Smaller size heads are harder to connect. The issue of flight above the disk surface becomes an issue as tese small heads have to get really close to the surface and not crash. So, these loose wires of WAT are no good as they interfer with flight. HIF is a ribbon and more controlable, but TSA is laminated directly on the suspension which is very elegant. INVX says electrical qualities are better for HIF.
Eventually, we want to see more component brought closer to the head as shrinking this distance speeds up the drive much the same as smaller line widths speed up chips. This is the next surge in earnings for INVX. It is possible that 10 or more wires could be coming into the head if these components are on the suspension.
Last month, Seagate announced a portable drive. It sounded like they were using INVX for more than normal interconnects. I wrote Doug Keller and asked him this question, but he still hasn't gotten back to me. The Marathon 4030sl, announced by Seagate is using your HIF products. It would be very positive if you could let the world know that Innovex is supplying Seagate with the "surface
mount technology (SMT) by innovatively placing the preamplifier chip
directly onto the actuator arm." It seems very important to validating
your future role in storage and flip chips in general.
Do you know something I don't? Why great earnings?
As far as picking stocks that are loosers, I can mention a few that would make your hair raise. Still, I've done well with INVX and find it is a reasonably understandable company mostly due to the honest guidance of the company. That's worth a lot.
Regards,
Mark |
