Disk Drive Sector Discussion Forum Message Board

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Technology Stocks : Disk Drive Sector Discussion Forum

WDC 181.08

+3.5%

Dec 19 9:30 AM EST

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To: Frodo Baxter who wrote (5317)	1/23/1999 5:32:00 PM
From: Stitch	Read Replies (2) of 9256

Lawrence, <<I agree with you that QNTM hasn't done enough to maximize shareholder value. But don't forget the management team is the best in a sector littered with sorry management.>> So we both agree that QNTM has done well to finally shoot the head operation. Also we agree that we can be a bit optimistic about the high end even though the high-end disk drive business (10% of QNTM's revenue) had a tough quarter with revenue of $130mm (down 8% Y/Y and up 1% Q/Q) as the new products look pretty decent. In terms of shareholder value, while I agree there has been some gaffs, I thought QNTM's management of shareholder value in the acquisition of ATL was quite clever. In addition, in spite of the stock repurchase program of $41mm, cash rose $128mm to $707mm, or $4.16 per share. Not too shabby. Incidentally, inventory turns went from 12.5 to 14.5, a 15% improvement. I consider this pretty good considering their model. I still have a bit of trouble with that model in that I suspect they must be a bit more conservative in their forecasted build plan due to the relationship with MKE. I also suspect they could have shipped more drives were it not for that. I hope this does not become a drag on the model as demand rises but then I note it is an easier horse to reign in when that becomes neccessary also. I think we need to watch turns closely as a measure of adaptability to the BTO/JIT paradigm. SEG recorded turns improving to 13.4 from 7.8. The disparity here could be a reflection of demand response. Best, Stitch

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