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Technology Stocks : Ampex Corp: Digital Storage
AMPX 12.44-8.4%Jan 30 9:30 AM EST
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To: Mary Beth Ford who wrote (1293)1/17/1997 7:27:00 PM
From: Todd W. Arden   of 3256
 
The critical part of this story is that the disk drive industy operates
with fear as a very strong motivator. The fact that Maxtor/Hyundai is about
to begin marketing KM - based drives to companies such as Compaq is most likely causing
companies such as Seagate, Western Digital, and Quantum to question whether their
market share is vulnerable.

My sense is that the leverage in the negotiating process has now shifted over to
AXC and within months at least one other large player will come on board. This will, in
turn, cause a ripple effect leading to the adoption of KM as the standard within the next
12 to 18 months.

As investors we must realize that the markets are usually efficient and will "price in"
the industry adoption much sooner than the actual event. The signal that will trigger
this will be the signing of another large player.

Assuming 600 million platters (1999 estimate of Inductive and MR) at .50 per platter to
AXC, one arrives at $150 million in after tax profit or $3 per share. The economics of the
situation will prove to be very powerful and will most likely cause AXC to be viewed as a
strategic holding amongst the larger mutual funds as they begin to understand the entire
story.

Todd
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