Larry, it's Herb again...
HMT's Last Hurrah?
When is a layoff not a layoff? When you're HMT Technology
(HMTT:Nasdaq) -- yeah, them again. So what if two of its largest
customers (Iomega (IOM:NYSE) and Western Digital (WDC:NYSE)
are in dire straits? So what if analysts have been slashing earnings
estimates left and right? So what if you're the only company that makes
media for the disk-drive industry not to fess up about business turning
down? HMT has miraculously avoided all of the industry's pitfalls.
So, what's this? A story in the Register-Guard in Eugene, Ore., quoting
HMT's vice president of biz development, Jon van Bronkhorst, saying
that the company will cut output at its plants in Eugene and Fremont,
Calif., for four weeks later this summer. Van Bronkhorst told the paper
all the details hadn't yet been nailed down, but current plans call for half
of employees at both plants to stay home for the first two weeks of the
slowdown, and the other half to stay home during the second two
weeks.
So, why no formal disclosure? Van Bronkhorst, in keeping with HMT's
long- standing anti-Greenberg policy, didn't return my call. However, he
told the Register-Guard: "We are not faced with the dire straits that
many others are faced with, in that we're not looking at layoffs, but we
are looking at production-level adjustments to get our production in sync
with our customers requirements." Translation: Sales have fallen off a
cliff and we've gotta do something fast or we'll really look like dopes.
Oh, and one other point: If van Bronkhorst had returned my call I would
have asked him why only $2.4 million in interest expenses appears on
the company's latest income statement. Based on the $230 million of
subordinated notes, with a rate of 5 3/4% -- plus its other debt -- the
real number should be closer to $3.5 million. The difference equals
around two pennies per share -- just enough to help the company make
some of its past quarters.
Capitalizing interest expenses is fine as long as business is booming. If
it's not, well, let's just say this may be a clue as to how HMT has
managed to sidestep the ruins of its rivals in the face of so much
industrywide turmoil. <
subscribers
thestreet.com
GM
|
