Report from the Quantum Annual Meeting 9/15
These are my notes and impressions, so take it for what you will.
The company tried to present an upbeat position going forward citing;
- new products; Big Foot, Fireball EX, SDLT, Optical Drives Terastor (?)
- cost reduction measures
- direct shipping plans to OEMs from MKE
- recent bookings reflect up tick in Sept Qtr
- projections of sequential growth in Sept and Dec
- correction in channel inventory for DLT
- SDLT schedule on track
- internal inventory for desktop down to 2 weeks
- new second source DLT agreement with Tandberg
- new manager in MKQC (head ops) experienced in turnarounds
- MKQC significant head supplier to Fireball EX
- Fireball EX having 60% less return problems, 30% faster than same
generation products from competition, good reception.
- All top 10 OEMs buying from QNTM
- Big foot has 30% of sub $1000 market
- New standard for Ultra3 SCSI
- Stock repurchase is not complete. 45 day window due to ATL purchase
stopped buying which will resume. They missed the bottom for buying, but
look for more buying very soon.
Some tables
Product Mix
97 98 99
Desktop 75 68 65
High end 11 11 12
DLT 14 21 23
Tape Media Royalties 2
Solid State 1 1 1
Market Share and Projected Growth
Rank Growth %
Desktop 1 6-8
High end 3 13-15
DLT 1 15-20
DLT Automaton 1 40
Solid State 1 50
Brown is painting the best picture he can as would be expected. Positive is
chance of improved sales in Sept and Dec, but then if that were not true it
would (will) be deadly. Heads are not making money. I think this new guy is
the last chance. He said no unit would be allowed to go on loosing
money. MKQC has GMR technology, and they expect to introduce GMR next year.
I asked about y2k. Internally, they feel they have addressed the problem.
They are also questioning suppliers, but this question can often get a
packaged response. They don't sound scared, which might be a worry,
but then maybe they have it all together. Externally, the other side of the
y2k issue for me is customer demand. How do they project it to impact
sales. The answer more or less was I don't know. That concerns as they
should know. They admitted being in denial that the sub $1000 PC was
here to stay. This cost them in planning and positioning which they hope
to they can better address today. So, they blew the move to cheaper PC's.
I they have a better plan going into 2000. Maybe they are just too gun shy to
make any projections. If they blow it again, it would be very disappointing.
Projecting sub$1000 PC market share going from 30% to 50%. They plan to
hold their 1st position in the desktop. Big foot has still got some room to go.
Fireball EX (3.2) showing very good acceptance. They have simplified
product design to use more common parts. They feel direct shipping from
MKE to OEM will cut costs and improve service.
No thoughts or plans for consumer hard drives. That is entertainment centers,
set top boxes, etc. All plans are PC or network centric.
I asked Mr. Brown how he feels about their Japanese partner with all the
financial problems over there. As expected, no negative answers. Brown
said MKE was a very conservative old company with 1 Billion in cash the
last time he looked.
Tandberg deal is structured to give them a good royalty and protect their
price. Tandberg brings strong marketing to Europe where they are weak.
In general, they are still committed to disk drives, but don't show evidence of
new demand or reason for the market to get better for hard drives. They see
room to gain market share in high end. Instead, looking to DLT and
automation to be the growth centers going ahead.
So what do you know from this that you didn't before? Probably not much.
Regards,
Mark
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