HMT Tech..281% sales growth at a trailing PE of only 17 Message Board

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Technology Stocks : HMT Tech..281% sales growth at a trailing PE of only 17

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To: David L. Hachey who wrote (308)	10/23/1996 11:31:00 AM
From: Girish Saraph	of 317

HMT vs KMAG or STMD: Well I do not think there is any pricing pressure from KMAG. Otherwise, the margin would not improve. Also look at the latest earning release from KMAG and their comments. Komag is having problems converting to 1900 Oe products on a mass scale and they hope to finish it this quarter. That implies they cannot challenge HMT at 1900 and 2000 Oe level yet. Also HMT reported 70% high-end market in their annual report. With STMD also competing in the high-end market KMAG has no (small) share. At lower end where Komag is a big player where the margins are thin and HMT has already moved on to greener pastures. HMT had 40% revs in 1900 level and rest in 2000 to 2200 level where there is no challenge. About STMD, they lost there big customer Maxtor to HMT which led to about 50% decrease in revs from previous quarter and big losses. They seem to have product problem (rumor, pl.,discount) My speculation is that this is the big customer that has deferred its order till the next quarter from HMT, because Maxtor is sued by STMD and STMD disclosed that an unspecified buyer has agreed to purchase the inventory left-over at a significantly lower prices. I speculate that Maxtor has agreed to take th inventory to avoid litigation and STMD has agreed for price reduction. About rev decline for HMT, I think thats due to 2 reasons: Few months ago HP pulled out of this business due to which HMT lost one customer and one customer (may be Maxtor) is delaying order. HQ downgrade seems to be intended to get rid of small investors. I think institutions have stopped unloading HMT (which they got at bargain prices and quickly reached $27). This unloading led to decline from $27 to $14 and now they want to load again at cheap prices that led to this downgrade. I am sure they will recommend `buy' after it reaches $24-25 level. -Girish

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