Mark,
I wish I knew the answers to your questions. Here are some opinions, for whatever they're worth.
What is the logic to QNTM at 12 1/2? ASPs continue to spiral down on desktop drives, demand still seems good, but supply still overwhelms it. Companies like WDC battling for survival, Fujitsu increasing capacity, MXTR now on its own, Samsung apparently is staying in the race. More competition for DLT coming soon, from Exabyte's new Monmath, Sony's AIT and SEG's LTO. At the very least, margins will fall. One hopes that they are preparing for that by continually reducing production costs, making sure that they are not late to market with Super DLT, and can at least match or better the specs of the looming competition with backward compatibility. Also, they bought back a lot of stock above $20/share for the ATLPA transaction, they should have saved their money in hindsight. They probably bought some more at 16-17 a few weeks ago. One hopes that they still have some authorized cash to buy some more in here, or that transaction will be dilutive. At some point, someone's got to fold.
As far as the dollar is concerned, it is hard--impossible--to gauge. Most drive companies--the US ones, anyway--price their drives and get paid in US$. I suppose the dollar falling makes them marginally cheaper, but with ASPs the way they are, what does this matter? The falling dollar may lead to more market weakness, though, if foreigners think it will really tank, as they will pull their money out of the US.
"What will we need to signal a rally?" In the overall stock market, a reversal on a day like today would be nice. Doubtful that that would happen just yet. A lot of fear has been generated. The Fed is overplaying its hand now, IMO, keeping rates too high too long. The joke is that one important reason that they are allegedly doing this because they are afraid of an asset bubble in the stock market, but the truth is that the averages are being help aloft only by the top 100 or perhaps 200 stocks; the vast majority of the market is already in bear market territory (it isn't just the drive stocks, although readers of this thread may feel that way). Their alleged fear of inflation was misguided a few months ago, it then became somewhat silly, and now seems to me to be getting stupid and irresponsible. On the other hand, this is the sort of thing that can be corrected in a day. In some ways, this whole thing is actually healthy, especially if you have raised some cash and do not need your money right away. Sentiment can change on a dime, as we all know, and as it has done this year several times.
IMHO. |
