Seagate Technology - Fundamentals Message Board

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Technology Stocks : Seagate Technology - Fundamentals

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Nov 25 3:59 PM EST

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To: Stitch who wrote (259)	12/2/1998 10:13:00 PM
From: Robert Douglas	Read Replies (2) of 1989

<<Why should overcapacity matter? Other industries manage to remain profitable with chronic excess capacity. >> Robert, the above comment discombobulates me. To me overcapacity is propositionally simple. Supply/demand seems to me a well understood reciprocal. When one exceeds another prices, are affected proportionally. N'est Paux? I would welcome some examples to the contrary. Stitch, no need to be discombobulated. My post was designed mostly to provoke some original thinking on this issue of overcapacity. What I should have better stated was the difference between potential capacity and actual production. As an example of this let me suggest the copper industry. If every mine, mill and smelter was running full-out the world would probably be producing about 700,000 tons more than will be consumed this year. This amount would end up in inventory and weigh heavily on an already depressed copper price. This however will not be the case as most copper producers have curtailed production enough to bring production more in line with demand. While the copper industry may not make huge profits under these conditions, at least they won't experience the enormous losses that most drive makers are. In the HDD industry there is certainly overcapacity. My question is; why does this capacity have to be put to such poor use? The only beneficiaries seem to buy drive buyers and not drive makers. Do these drive makers have anyone that went to business school? When they should be cutting back production they are out building new plants. It's less frustrating being a Cubs fan than a disk drive investor. -Robert PS Thanks for the links, I will get to them anon.

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