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Technology Stocks : Applied Magnetics Corp

APM 1.255

-0.4%

10:41 AM EST

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To: Think4Yourself who wrote (10751)	12/7/1997 10:07:00 PM
From: William T. Katz	Read Replies (2) of 12298

RE: Operating at capacity Before the last earnings report, a number of thread posters had talked to Crisman and the "operating at capacity" or "booked to capacity" comment came up several times. What I should have reminded myself is that "operating at capacity" does not equal getting great profits. There are the small factors of yield (process .. head makers don't refer to "profit yields") and average selling prices. You can bet that all this carnage at the disk drive maker level will result in some pressuring of prices for their components. With the decrease in productions, it will be a buyer's market right up the chain and even if there are contracts, the pressure will manifest itself in upcoming quarters. Second, the process yields for MR heads at APM will probably be less than RDRT given their last quarter and the "transitional" stage of their MR production. Then, given all this carnage at the low-end, you'd expect some big reductions in TFI demand and this would cause a glut regardless of increased sub-$1000 PC demand. -Bill

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