I don't know anything about the RAID market, but it sounds like a fast growing sector. Then, we see that about 5 players control 90% of the market, of which the only pure player is EMC. So, you question whether it's possible to buy a second tier player who might be specialized in a way that they'll be profitable despite terrible odds.
But, you didn't really build a case to say that these companies could in fact control a high profit niche. The historical view says they are in a turn around story up against a superior player EMC. It doesn't sound like they have enough product differentiation, or it's there, but I missed it.
Are you asking us to talk you out of this investment? I'm not sure I see good logic in betting on the underdog. It hasn't really be a very good investment in the past.
Just out of curiousity, maybe Quantum is a good play? The ATI business coupled with the their existing tape business would seem to still be a very strong opportunity with the SDLT coming on line soon. Is it logical to think they will also have a good quarter just like Seagate?
When I look to new areas of investment, I think the growth of the net and the wider spread use of computers which carry lower margins must be a good case for a software play. I like some VPN/security companies. They have great margins, and great growth.
I also think AT&T has shown itself to be a new company. I like their move into the business internet services. Others like Worldcom and Qwest seem to be strong players, but T's Dow position and reputation should push them over the $100 mark.
I also thought you made a very good case for Zigo recently. There is a lot of chaos going on behind me, so I'm not making my point very well. I wonder if we should be saving cash for a correction rather than chasing second tier players?
Regards,
Mark |
