QUANTUM Message Board - Msg: 3195976

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Technology Stocks : QUANTUM

QNTM 9.380

-4.7%

Dec 12 9:30 AM EST

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To: Z Analyzer who wrote (7074)	1/17/1998 9:11:00 PM
From: Banjoman	Read Replies (2) of 9124

>>With two analysts talking about Quantum's breakup value, perhaps someone will listen. If DLT resumes its 25-35% plus growth the 20 P/E or value of $34 for just DLT is too low. << The valuations people are putting on DLT are absurd. DLT is a proprietary technology that, at some point, will have some real competition that will force margin contraction. In addition, due to the expense of the drives, they will never be mass market - they will only be used in industry/university settings where you need to back up large disk farms. I'm unsure of what that implies about market size - but given the probablility of future competition and the limited market a fair valuations would be between $15 and $20/share. If you figure 20% growth rate for 4 more years, followed by 4 years of declining sales with margin contraction, the business will bring in $24/share in after-tax income to the company - worth something less than $20 after you discount. QNTM is still cheap on that basis (the DD unit is worth $10/share or so), but not as cheap as folks seem to assume. A spin-off the DLT business wouldn't be too great - a single product company is extremely vulnerable to technology change.

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