Daniel,
First, I never implied that you were a Johnny come lately. What I implied was that you err when you call people 'wild-eyed optimists' when the record clearly shows that these very same people were willing to wrestle with the negative aspects of this company's balance sheet and prospects. I also made the point that you did not contribute to those "overly optimistic" discussions.
Second, what 'sweetheart deal?' Ampex has made it clear that they want KM to get the widest possible acceptance. Maxtor, if first to market, gets preferential pricing/licensing terms. But, the other disk drive makers can cut their own deals with AXC. By the way, it is fair to assume that the better than anticipated response to KM that AXC detailed in its 11/27/96 filing probably means that there are minimum purchase requirements that Maxtor has to satisfy IF IT WANTS THE PREFERENTIAL PRICING TERMS. All moot if Maxtor can't get KM to work in its assembly lines.
Third, you say "... I do not believe Maxtor's previous expenditures for R&D gurantee full development." NOBODY IS looking for guarantees here. The facts are that Maxtor has funded studies on KM (Seagate, HMTT, and Maxtor funded a study conducted by Dr. Jack Judy of the University of Minnesotta MINT in 1994), has spent time and money evaluating KM under the non-disclosure agreement, and is the first drive maker to evaluate KM for an actual disk drive product cycle have to be viewed as progress in Ampex's work to make KM part of the continued development of inductive recording and MR recording. Probable NOT guaranteed. And my comments on the viability of your wait and see strategy still hold. You may want to take a look at how aggressively Western Digital compressed the normal disk drive cycle of 6-12 months and introduced a completely new form factor, the 3" disk drive for laptops, in order to be first to market with a new product.
Seagate, IBM, and Quantum do not have a 3" laptop disk drive for the next 2 cycles at least. That's one way to increase market share, don't you think? Which, come to think of it, brings me back to this wait and see strategy of yours. If Maxtor can make disk drives with keepered media, WHY WOULD THEY WAIT? Because first-to-market is not optimal? Or because businesses don't always act rationally? I don't think so. A more reasonable assumption to make is that Maxtor, assured of financing by its deep-pocketed Korean parent, will attempt to use every technology in its arsenal to increase its market share from the current 5-7%, or about $1.2 billion in sales.
Fourth, let's use some common sense here. Ampex indicated that they
approached 3 of the largest disk drive makers. Setting aside IBM and Seagate, the 2 most vertically integrated players, that leaves you with Quantum, Western Digital and Maxtor. If Maxtor wasn't that one manufacturer referenced in the filing THEN it was either Quantum and WDC that indicated that they were prepared to finalize the engineering study in the 1997 first quarter and produce disk drives with keepered media in the second half of 1997. My point is that, whichever way, that has to be viewed as an obviously positive step. Again, positive NOT guaranteed!
Look, we differ where we differ, but the funny thing is we both end up on the same long side of this stock. At least for now.
Gus |
