A lot of speculation about the stock, its price and where its going. We should all know that its very difficult to tell such things, that the market never does what you expect it to do.
Forget the next two quarters. They had already given guidance that they would be weak.
A few substantive notes from the conference call:
Qualified OEMS has gone up 50% for their drives, mainly as a result of their expedited shift to MR heads.
Expect to see MR heads more than 80% of business by june, well before original guidance.
Highend business - enterprise sector - gaining market share where large competitors arent'. Currently 10% of business. Solid growth . Key'd on this as one of the keys to return to profitability.
Low profile 9.1 gig drive - qual'd 7 and 7 more coming online in next few months. IBM and WDC only ones with low profile...stated strong profile.
balance sheet strong..
Continues to see strong fundamental growth in data storage capacity
Inventory turns were 14 which they would like to get up a few points.
As of q, end they had 8 weeks inventory in channel...had fallen since q ended, felt that was a positive.
Strong comments that cap-x (capital expenditures) would come down nicely in q3 and more so in q4.
Gaining qual'd OEMS for 2.1 drive....2.5 avg. megabite is sweetspot
No problem with components for move to MR heads.
Picking up share in MR head.
The only down side I saw to the conference call was:
1. that losses were not adjusted positively for next two quarters and were indicated in the high end of the range. positively, they were indicated in wall street's range. remember, these are figures they worked on months ago without concrete look at this qs. numbers, probably when the stock was also 21, 24.
2. That Cap-x was slightly higher than they wanted but they are aggressively working to get it down. Haggerty is known for this and I am sure will do it successfully.
3. Cash flow...but I wouldn't sweat that, they have a great balance sheet.
Make no mistake, I like this company. Sure, there were some downsides with the conference call, you wouldn't hear them syaing they were making $1.00 next qtr. and expect to see the stock at 17. But you have to have a time frame that goes out 12 to 18 months...
I'm bullish. As for its action, I wouldnt expect to see it open more than 1/2 point up or down from its position, but there seemed to be some hinting in the conference call, a few times, that they felt the bottom was coming sooner than later.
who knows? don't load up. Average up and you should do fine as a long player. Shorts, remember,they don't go to zero that often.
Regards,
steve@yamner.com |
