INVX Innovex Comdex Winner !! Message Board

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Technology Stocks : INVX Innovex Comdex Winner !!

INVX 21.69

-4.7%

3:59 PM EST

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To: Mark Oliver who wrote (1839)	12/10/1997 7:12:00 PM
From: Kurthend	Read Replies (3) of 3029

Mark, Some quick notes on the QTNM CC call today (12/10/97). I didn't write down eveything and will just hi-lite some of the points I picked up. I take no responsibility for the content and I am sure I butchered up some of QNTM's statements. All I can say is that if they sue me they have to take my margin account with them:). Besides I have the flu so I can claim mental/physical incompetency at the hearing. The reason I put this on this thread is that they still seem to see a relatively high demand for dd units (continued growth-although at a slightly lower rate and record units being sold). The only thing that might hurt INVXXX is pricing pressure from what I can see. Anyway, here are my notes: DD levels are at record levels this qtr ending Dec (numbers not given). Extreme pricing pressures in the distribution channel, especially at the desktop level and this will continue until next qtr (no dates given). DLT relatively flat this qtr as compared to last qtr. dd desktop storage also relatively flat Hi-end storage demand is still good. IDC stated 9% unit growth this qtr (SEP-DEC) as compared to 20% last year (PC growth or dd growth I can't remember).. Demand for dd is still there, but too many players. Inventory levels are being reduced (indicated next qtr will hopefully be the last qtr with hi inventory levels. OEM demand still strong-record units being sold (including desktop sales). DLT currently 30-35% gross margins, hoping for 40% margins in the long run. Dec dd units sold are at record levels. By end of March they hope to have higher margins on their desktop due to lower inventories. Lower capacity dds are the hardest hit. There is a 10% decrease in pricing in the desktop units. This is not normal as compared to previous years (Christmas season). The industry as a whole has recognized that demand has slowed down from earlier levels and that channel inventories are hi. This will help the dd industry out as all the 4 major players realize that they cant survive in the situation that hit the industry a few months back. Overall gross margins last qtr - 19%, this qtr in the mid teens. 2-3 gb drives are the hardest hit in terms of I believe pricing and over supply. Desktop-QNTM still believes they will have double digit growth. I believe they said their hi-end will grow 5% this qtr. (Although the desktop is growing faster than the hi-end, the profits are seen mainly in the hi-end). Their enterprise level storage systems will start shipping (new products) in the Mar qtr but they will see a big/significant contribution in the Jun qtr. Their media division is not growing fast. DLT-Last 6 months of this FY will increase 100% over lst 6 months of last FY but that the DLT growth after the last six months of the FY will basically = the increase in the server rate (rate of servers sold). Direct correlation between the servers sold (rate) and DLT rate. I believe they said that their 2.1 mb platter will be one of their fastest ramps in history (Mar qtr). QNTM's customers (I believe OEMs have little dd inventory). QNTM said IDC stated that the PC growth rate is still 20% in the US. Slowing down in Asia (can't recall the exact figures). Pipeline assembly may be the way to go in terms of solving inventory problems. DD mix is 60% OEM and 40% distribution channels (They indicated they wanted to increase OEM to 70%). They repeated there is strong demand from OEMs for dds. Bill plan-- hi-end they have already starting cutting back and will start cutting back on their desktop. They stated I believe there will still be record dd units sold for the Mar qtr but that their earnings/revenues for dds will remain flat. One of the last things they mentioned was that they believe there will still be consolidation in the dd industry as 4 players control about 80% of the market. The said the secondary players (to include Asian companies may re-think their plans to get into the dd market due to the low margins and current situation in Asia. This should bode well for all the main players.

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