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Technology Stocks : QUANTUM
QNTM 9.800-6.8%Dec 11 3:59 PM EST
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To: jkb who wrote (6709)12/13/1997 10:01:00 PM
From: Rational  Read Replies (1) of 9124
 
Jay:

I think Maxtor began cutting prices and Fujitsu followed. SEG, WDC and QNTM had to follow then to clear their inventories. When Maxtor first began cutting the price, the whole concept of cost of capital did not exist. They simply set a price equal to labor plus material.

As they begin to realize the tough financial situation, they will have to raise price to cover all costs so as to stay in business. They can do so since they know other competitors have no incentive to keep prices low. I am assuming that Maxtor management will have learned that to stay in business, they have to cover all costs so that they have enough hard currency to modernize plant and equipment and pay finance charges -- IMF is teaching them such business lessons!! I do not know prices will rise immediately, but they will soon.

Sankar
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