Thanks for the link. Haven't read it all yet, but downloaded it, and will print and read over the weekend. Did you follow what they said about why they lost money in the last quarter? Something about $14 million in "compensation" due to a plan that has now been amended? (Gee, I wonder who got that, Mr. Park or Mr. Lee, I suppose.)
Here are some excerpts from the filing (mainly historical, but also includes some statistical data; personally, I don't like the way the last paragraph reads):
During the mid-1980s, the Company was a leading technology innovator in the
HDD industry. Faced with intense competition, the Company pursued all major
product segments in the HDD market, which added significant complexity to the
business and caused the Company to delay or miss a number of key product
introductions. This strategy led to the deterioration of the Company's overall
financial condition which, in turn, led to the sale of a 40% stake in the
Company to HEI and certain of its affiliates in 1994. In early 1996, HEA
acquired the remaining publicly-held shares of the Company's Common Stock and
shortly thereafter, HEA invested in renewed efforts to revitalize the Company.
In July 1996, the Company hired Michael R. Cannon, its current Chief Executive
Officer and President, a 20 year veteran of the HDD industry, to lead the
turnaround of Maxtor. Mr. Cannon immediately took a number of steps to position
the Company to become a significant provider of HDDs to leading desktop PC OEMs
including improving product performance, quality, time-to-market entry,
time-to-volume manufacturing, and refocusing the Company's sales and marketing
effort.
As a result, Maxtor's performance has improved significantly during a
period of severe fluctuations in the overall HDD market. The Company's
restructured manufacturing and product development processes as well as its cost
competitiveness initiatives resulted in the Company achieving one of the fastest
transitions in the industry from HDDs utilizing thin-film head technology to
100% use of MR head technology, while also achieving among the lowest selling,
general and administrative costs as a percentage of revenues in the industry for
the 1997 fiscal year and the first quarter of 1998. This manufacturing and
development process also helped the Company increase its units shipped per
quarter from 1.3 million units in the first quarter of 1997 to 3.5 million units
in the first quarter of 1998, which resulted in Maxtor increasing its market
share of the desktop HDD market in terms of quarterly unit shipments from 5.6%
to 13.4%, according to IDC. The Company's refocused efforts on leading PC OEMs,
such as Compaq, Dell and IBM, resulted in an increase in the Company's revenues
from these PC OEMs from 6.5% of total revenue in the second quarter of 1996 to
51.8% in the first quarter of 1998. Cumulatively, these changes have led to
significantly improved financial results. The Company's revenues grew by 122.5%
from $247.0 million to $549.6 million during the first fiscal quarters of 1997
and 1998, respectively, while improving its gross margins from (2.9)% to 11.3%
during the same period.
According to IDC, the desktop PC market is the largest segment of the
worldwide PC market, accounting for approximately 80% of global PC shipments in
1997. As a result, desktop PCs were the leading source of demand for HDDs,
accounting for more than 75% of all HDD units shipped worldwide in 1997. PC
OEMs, which compete in a market that is consolidating share among the top ten PC
OEMs, accounted for greater than 50% of PC units shipped during 1997 and the
first quarter of 1998. IDC forecasted, as of May 1998, that the desktop HDD market will grow from approximately 100 million units
in 1997 to 185 million units in 2001, reflecting a compound annual growth rate
of 16.6%.
Maxtor seeks to be the dominant provider of HDDs to leading PC OEMs,
distributors and retailers. Maxtor's strategy to achieve this goal includes the
following elements: (i) effectively integrating new technology; (ii) leveraging
design excellence; (iii) capitalizing on flexible manufacturing; (iv) increasing
market share with leading PC OEMs; (v) maintaining customer satisfaction; and
(vi) broadening the Company's product portfolio. |
