Mark,
In response to your post, let me make a few opinionated comments.
Quantum, IMO, is in all HDD segments. So the Michael Brown comment, "they didn't compete for every segment" is a bit inaccurate. Their 7200-rpm SCSI Viking and Atlas serves the high-end desktop/low-end server-enterprise. The BigFoot hits the sub $1000 and goes up through all segments of the desktop. The Fireball goes aross all segments of the desktop. IMO, they are caught up in this trap of being "a product for all segments" player. Clearly they have lost money overall in the HDD segment.
BigFoot, while currently the sales leader in the "non inventory firesale" category for the sub $1000 PC, they will loose this segment to the Seagate and Conner "designed-to-cost" drive efforts, unless they come to market soon with theirs. The BigFoot can only go so low in price with its reliance on 5.25-inch media. Not a lot of folks building 5.25-inch media, so the economies of volume won't be there.
The HDD guys will say that development efforts today in the high-end segments forces them to design "leading edge" products which will become the low-end products tomorrow. That's great if you're making money in the high-end while your developing these products. You also get caught up in this 60% areal density curve issue.
Now I have trouble seeing Quantum continuing to stay the course with MKQC for heads. It was a good idea that hasn't played out well. With all the capable merchant head suppliers here and in Japan with mucho capacity, why bother beating your "heads" against the wall. Dump the plan and the stock price will jump up.
SuperDLT WILL be a winner for Quantum. I believe it will happen on time and since it's backward compatible with DLT, the installed base will love it.
The ATL acquisition also fits the DLT/SuperDLT model just fine. Maybe Brown is planning to make him and us some real money by becoming just a damn fine tape storage device and subsystem manufacturer.
Because of DLT and the prospects for SuperDLT, I feel they would be a very logic investment ---- if they refocus their HDD business efforts to become profitable (by eliminating the high-end and concentrating on the desktop) and shed the yoke of MKQC.
Until I saw signs of this happening, and saw the overall market climate improve, I would not get back into them.
You asked if I thought Quantum would be helped by Seagate getting out of the desktop segment. My answer would be yes, but more importantly, I think it could help Seagate more.
I know you like Innovex and Hutchinson, but I think we need a few more quarters to see how they weather the storm along with the rest of the gang (APM-RDRT-HMTT-STMD-KMAG etc.). Intevac is another company that is against the wall right now but can stay the course for a few more quarters, assuming we see overall market improvement in the first half of next year.
As Stitch said (I believe it was him) this industry is not where you want to invest right now. But then I'm not comfortable with any other segment at the moment. So for me, it has been a flight into money market funds, except for still being in RDRT (but I'm looking at that one closely with the idea of getting out (if these merger rumors continue through next week)
Regards,
LT |
