*AV* -- I do not want anyone to confuse the contents of this post with my prior comments on this sector. I mentioned that I was off on a mIRC channel working on some improvements to my investment capabilities. I received the list of 50 stocks from my counterpart to go through and cull down to a manageable level. As I said before, I glean those stocks I am familiar with and provide some commentary. I have found the overlap of my universe and stocks on radar with this list of top 50 stocks "in play" have yielded some great results over the past few weeks.
You must understand, "In Play" means some might happen and there is no real indicator of which direction it will go. You need to monitor the action on the stock, news, etal. prior to the market open and into the open to see the ebbs and flows and make an informed decision.
I am providing an excerpt of the report I am sending out that deal with the DD sector. It was not my doing that these stocks appeared on the output list for tonight. They were determined by a criteria set up by my counterpart with his own proprietary algorithms which only searches the NASDAQ exchange, by design.
For better or worse, here is the excerpt and comments. I still feel uncomfortable in this sector but I have a dilemma. This "system", a merger of two heads together has worked admirably for the past 2-3 weeks. I should not ignore their appearance on this list tonight. I have listed the stocks previously that we were buying and selling short which were more or less equipment and IC companies.
18 stocks appear today also. Just a coincidence. However, I find it extremely intriguing that I posted a comment on the channel today just before 1 pm about the Disk Drive Sector along with a comment on the perception of the tech rally and reversal.
<AV> Traders are now betting on a Disk Drive sector bounce.
<AV> The pundits are saying that the techs lead the downturn and will lead the recovery.
In addition to this Yank and I were bantering about a tech stock that provides equipment for the advanced technological requirements as we go to 0.18u feature sizes. The company in question is IPEC.
With that said, tonight's list looks like a who's who of stuff we were talking about today.
GROUP 1 - The Disk Drive Sector That Seems To Have Gotten The NOD.
RDRT - Between them and APM you have 2 of the largest suppliers of subcomponents to the major drive manufacturers. These guys supply the Heads (Thin Film heads, Magnetoresistive Heads, and Giant Magnetoresistive heads). The industry has been hit hard as the major disk drive manufacturers have consolidated and have should conisderable losses due to falling prices, lower margins, and oversupply of products in the distribuition and inventory channels.
Mix in the fact that SEG (the world's largest Drive producer) makes its own drive heads and has acquired some of the drive customers that APM and RDRT were selling to and you see some issues for both companies. also, last year, each attempted to take each other over. A real soap opera here. Finally, IBM, who exited the Disk Drive business, has the "hot hand" for the GMR head technology that they are OEMing to some of the majors. With all this happening both RDRT and APM have been bloodied. When I was asked to compare both companies and to choose a victor in a battle between the 2 companies, my pick was RDRT over APM. Who knows. However, we also have KMAG below which can be considered another subcomponent supplier to the Disk drive industry. See the Feb 4 and July 22 excerpt of a story listed below.
QNTM - The #2 Disk Drive manufacturer, second to SEG.
HTCH - see story excerpts below
HUTCHINSON, Minn., July 21 /PRNewswire/ -- Hutchinson Technology
Incorporated (Nasdaq: HTCH) today reported a net loss of $9,250,000, or $.47 per diluted share, on net sales of $107,127,000 for its fiscal third quarter ended June 28, 1998. In the comparable fiscal 1997 period, the company reported net income of $13,698,000, or $.68 per diluted share, on net sales of $121,713,000.
For the nine months ended June 28, 1998, Hutchinson Technology reported a net loss of $35,149,000, or $1.79 per diluted share, on net sales of $291,237,000 compared to net income of $41,498,000, or $2.24 per diluted share, on net sales of $352,878,000 in the first nine months of the prior fiscal year.
Wayne M. Fortun, Hutchinson Technology's president and chief executive
officer, attributed the decline in third quarter net sales over the comparable fiscal 1997 period to a decline in shipments of conventional suspension assemblies which was not fully offset by an increase in shipments of TSA suspensions. (TSA suspensions are suspensions incorporating integrated electrical leads.) The company believes the decline in conventional suspension shipments is due to continuing weak demand among the major disk drive manufacturers.
Hutchinson Technology is the leading worldwide supplier of suspension
assemblies for disk drives.
KMAG - see stories below
SAN JOSE, Calif., July 22 /PRNewswire/ -- Komag, Incorporated (Nasdaq: KMAG) today announced that its stockholders approved by substantial margins two proposals that will provide the company with additional flexibility to meet the financing requirements of its business. The first proposal increases the amount of common stock the company is authorized to issue from 85 million shares to 150 million shares. The second proposal authorizes the sale and issuance of up to $350 million of common stock in equity and/or equity-linked private financing transactions at a price below book value but at or above the then current market price of the common stock.
"In addition to intensified efforts to conserve cash in our business
operations, we are actively exploring a variety of financing alternatives to enhance the company's balance sheet during this difficult period in the disk media industry. An equity or equity-linked private financing transaction represents one such alternative. The passage of the two proposals at today's special meeting of stockholders simply authorizes the use of this alternative
as part of any financial restructuring subject to the discretion of the company's management and board of directors. We believe that any financial restructuring should allow for sufficient operating flexibility, provide lenders with appropriate returns, and minimize stockholder dilution," said Stephen C. Johnson, president and chief executive officer of Komag, Incorporated.
The company ended the second quarter of 1998 with $149.8 million in cash and investments. The company's second quarter loss of $261.9 million resulted in a default under certain financial covenants contained in the company's various bank credit facilities. The company is not in payment default under any of these facilities. The company currently has $260 million of bank borrowings outstanding. The company is in discussions with current lenders to re-negotiate the terms of these existing agreements.
SCOTTS VALLEY, Calif., Feb. 4 /PRNewswire/ -- Seagate Technology, Inc. (NYSE: SEG), a leading supplier of technology and products helping people store, access, and manage information, and Komag, Incorporated (Nasdaq: KMAG), the world's largest independent supplier of thin-film media for computer hard disc drives, today announced that the two companies have signed a cross-licensing agreement that grants mutual rights to certain existing and future patents of each company. The cross-license agreement covers patent
rights for thin-film media.
"Because of the storage technology industry's intense competition,
companies must choose between cross licensing knowledge to other companies or spending millions of dollars in litigation to keep its knowledge proprietary," said Alan Shugart, CEO and chairman of the board of Seagate. "Seagate is a strong advocate for cross-licensing to serve as the solution of choice, and the Company has maintained this position throughout the years, believing that such action furthers technological advancement, strengthens companies through competition, and ultimately benefits customers and technology consumers. The
agreement with Komag is yet another step in that direction, adding to earlier cross licensing agreements with such companies as IBM, Fujitsu, Quantum, Western Digital, Maxtor, NEC, Hitachi, Toshiba, and Read-Rite, among others."
Well, the only things missing from this list are WDC, APM, SEG, and INVX to round out the focus group of stocks I follow for this sector. Three of these stocks would never appear on these lists since they trade on the NYSE and this list is restricted to NASDAQ candidates.
It seems a great deal of the planets are about to come into alignment. the drive producers and the sub component assembly providers to these manufacturers are all in play. That is, all but one of my focus group that trade on the NASDAQ are on thislist. Second, an informed source alerted me to the oprignal trading comment above. top this off with today's volume and price rise in my favorite stock of the entire group, RDRT, and you have a recipe that bears close scrutiny.
I guess the traders are looking for something to get involved in and getting positive about. See the following link for a nice graphical representation of 7 of these stocks. the overlaying charts on SI only allow a max of 7 companies. KMAG was left off.
techstocks.com
Good Luck |
