APM simply compared its yield on their TFI heads with that of MR heads.
Sankar,
I'm sure you are misinterpreting the statement:
Net sales and gross margins in the fourth quarter of fiscal 1997 were negatively impacted by lower yields on newly qualified magnetoresistive (MR) programs and 1.7-gigabyte-per-3.5''-disk inductive thin film products, which were in their first fullquarter of volume production.
What this means is that the process yields on the 1.7 TFI AND the 2.1 MR were lower then was anticipated. And therefore, because yeilds were not as good as they thought they would be, they ended up not having enough heads to sell And therfore net sales were "negatively impacted". And because yields were not as good as expected, the heads ended up costing more produce then anticipated, and therefore gross margins were "negatively impacted".
I would thus feel safe to say that APM did not mass produce MR heads because of the demand for their more profitable TFI heads.
This is completly true. Your concern should be that the demand for the TFI products appears to have disapeared practically overnight. It is quite clear from statements APM has made that they anticipated that TFI would have a useful life of 1 more year.
Now, the increase in the demand for MR heads from WDC will raise the yield of MR heads
The increase in demand(or mass production) does NOT raise yeilds. Only time, expierience and the refinement of the fabrication process does this. This is why APM has been producing MR heads for many years and is only recently(FQ3) been qualified for MR programs. Mass production does however increase gross margins.
Crisman's timing with WDC's announcement cannot be coincidental, IMO.
The statement by APM was made long before WDC had any idea that they would have to accerate to MR. Rest assured, and I don't think anyone but you will dispute this, APM has definately been caught off guard by WDC's accerated MR strategy.
Am I missing anything?
Yes, but keep coming back and we will straighten you out. :)
Jon Bird |
