QUANTUM Message Board - Msg: 2928724

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Technology Stocks : QUANTUM

QNTM 4.025

-2.5%

Feb 3 3:59 PM EST

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To: Rational who wrote (6339)	12/10/1997 2:48:00 PM
From: Rob S.	Read Replies (2) of 9124

Thanks for the details on the IMF gurantee arrangements. Yes this is what needs to happen in asia both for their economies long-term benefit and for the US and rest of the world. I think that the benefit to well positioned US based companies will be substantial. Some of the semi and test equipment companies may hit hard if the Taiwanese, S. Korean, etc. companies are forced to cut back cap equipment purchases drastically - which I think is quite posible. Amat, CMOS, LRCX and several other semi equip companies have recently reported increased demand from Asian companies. I think that this demand may well be false - that these companies are trying to take advantage of existing credit facilities before they must face new rounds of negotiations with their creditors and their credit either dries up or becomes much more expensive. For the short-term this turmoil is more likley to be negative than positive as many of the "experts anals" will not have it sorted out and many institutions will sell the high tech groups indescriminately. Several of the chip makers should end up coming out well ahead. I haven't been able to figure out exactly when the benefit will occur but think it is highly likely. The DRAM and SRAM suppliers and other product areas that have been hit over the past couple of years by extremely agrewssive pricing from Asia should benefit greatly. Short-term, some tendency exists for the Asian companies to try to bail themselves out of their debt troubles by exporting even more products at agreesive prices; taking advantage of the currency devaluations to increase market share. However, that will be giving away the profits they need to repay their massive debts. The IMF, US & Japan are sending the message to these economies that the debt ridden "gain market share at any cost, make profit latter" strategy just is not working and that these companies and foreign finacial institutions must act responsibly to charge fair prices to make money based on their ongoing market share and balance sheet positions. Some of these companies just are not going to make it and will either have to cut costs and increase prices or will go bankrupt. Some will probably go bankrupt no matter what they do. The overriding scenario is one in which the tremendous price pressure caused by highly subsedized expansion will largely come to an end or at least a dramatic adjustment. The result of this will be a healthier climate for US, and European semi, HDD, peripherals and other mfgs. Some companies will benefit more than others - depending on their dependence on foreign markets v. sources of supply. I think QNTM and the HDD/storage sector will remain upset for a while because fears will attribute Asias problems across the board without much rational thinking. The HDD companies can be expected to have negative earnigns impact for the next couple of quarters but the overal strength of the sector should be improving toward the end of next quarter. WDC has made more statements about the posibility that they will file a petition for a trade action against Fujitsu and other Asian suppliers. They should have an increasingly strong argument if they can show that these competitors aren't being finacialy responsible and are therefore dumping their product at prices that do not support normal debt and profit requirements. This period of change is very upsetting to the market short-term but it is the kind of structural change that has been needed for some time and will lead to much healthier US companies in the future.

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