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Technology Stocks : Western Digital (WDC)
WDC 166.10-2.3%Nov 12 3:59 PM EST
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To: Stitch who wrote (10076)1/19/1999 1:08:00 AM
From: InfoMiner  Read Replies (1) of 11057
 
Stitch,

I agree with Ian on this and am also long. First, and foremost I believe investors are considering WD's EPS potential. WD only has 90,000 shares or so with a 1997 market share of 19% (Disktrends). The other independents(leaving out IBM, Toshiba, ETC) have a combined amount of 500,000 shares with roughly 50% of the market share in 1997(see link komag.com for 1997 mkt share and 1998 Jan-Sep Mkt share. and thank Komag!). That is a lot of EPS "leverage." But of course things have gotten worse for WD. Much worse. According to Disktrends, WD's Mkt share has dropped to 14% for the first 9 months of 1998.

However, the CEO stated a few months back that demand was "firming" and that their "time to market" had improved. Here is where I get subjective. With the high fixed cost structure typical of DD companies I don't think the CEO would say demand is firming unless demand for WDCs products was at least in the ball park of 1997 demand. They have to make enough $ to cover all those fixed costs or start closing plants. Since I haven't heard too much about layoffs or plant closings I am hopeful. I believe they will report an EPS of -75 cents (or better) for 4th quarter with revenues above 800 million.

My long position is risky and my analysis subjective. I can appreciate a short position on this stock and seriously considered it a few months back.

Best of Luck,
Bradley
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