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Technology Stocks : QUANTUM

QNTM 6.371

-7.4%

Nov 19 3:59 PM EST

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To: Mark Adams who wrote (8505)	2/26/1999 11:17:00 AM
From: Henry W Singor	Read Replies (1) of 9124

Thank's Mark. It doesn't seem that negative to me. Also the line about more companies getting into the low end is bogus. The competitors in this industry are WDC, QNTM, SEG, Fujitsu, Maxtor and Samsung. Samsung doesn't seem to be very significant right now. I hardly hear of any others. Also careful examination will show that IBM has exited the low capacity side of the market. You heard it here first. To verify this check out the press release for their new Deskstar 25GP and 22GP drives. storage.ibm.com They have 5.1GB/platter and 4.5GB/platter but they only come in 4 and 5 platter versions. It is my guess that WDC makes the lower capacity versions and will supply these to IBM. It is not publicly known but it seems a reasonable part of IBM's agreement to supply WDC with heads. I had expected the industry to improve when Conner was purchased but what I missed was this. storage.ibm.com IBM developed the GMR head while everyone else was using MR and WDC was still using Thin Film. Notice from the press release that IBM was shipping these 3.2GB/platter drives in the first quarter of 1998. At that same time I know QNTM was shipping 1.6GB/platter MR drives and WDC was shipping 1.6GB/platter thin film. IBM had a huge technological advantage and they took advantage of it by building a factory and getting into the OEM drive business. Notice that the 16GP comes in Seven capacities: 16.8GB/12.9GB/10.1GB/8.4GB/6.4GB/4.3GB/3.2GB, IBM killed everyone else in the industry but I wouldn't be surprised if they also found that they made very little money in the business. That is why I believe the evidence shows that IBM has exited the desktop OEM drive business (except at 20 and 25GB caps). Their agreement with WDC probably recognizes that WDC can assemble desktop drives cheaper than they can. Also very reasonable. IBM makes a lot of money on the increased volume of GMR heads, WDC survives and does quite well supplying drives to IBM and "the usual suspects". I don't have time to post all the links here but surf around to the home pages of WDC, Qntm, MXTR, Fujitsu and Seg, Notice that all are shipping 4.3GB/platter drives at this time. Only WDC has announced a 5.1GB/platter program. The playing field is pretty level at this time so there is no advantage to any player in pushing down prices. No one has a significant cost advantage as IBM did last year with their GMR heads. The answer is that this dip in drive stocks is perhaps the best time ever to pick up the drive companies. Henry

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