Seagate Technology - Fundamentals Message Board

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Technology Stocks : Seagate Technology - Fundamentals

STX 325.95

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3:59 PM EST

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To: Duker who wrote (555)	3/1/1999 7:41:00 AM
From: William Epstein	Read Replies (1) of 1989

Duker; There is a debate of a fundamental nature going on on the other thread. Basically, Mark Oliver posted some very interesting thoughts concerning the future of the HDD industry as it is tied up with PC industry, as a whole. He showed that there is a case for arguing that HDD stocks should remain undervalued because profitability going forward will flatten out and perhaps disappear. He wonders if the recent return to normal inventories are really a blip in a long term glut of a cyclical commodity instead of the other way around. He could be right. However, I keep asking myself are we talking about an industry that makes only one product or does it make many products? Are we talking about all the companies in the HDD industry with very similar marketing, sales and financial structures? Are we talking about all companies that have the same focus? Of course not! Your post illustrates these questions. Seagate is in a very advantageous position to take advantage of the needs that will come from storage networking. SEG generally focuses on the high end of the market and its product development reflects that focus. So long as it keeps its more advanced technologies coming down the pipeline there will be a strong demand for its products. The length by which it can outdistance competitors will be reflected directly in its margins. People and companies will pay much more for advanced technology than they will for a commodity because they are not the same thing. A television is $300.00 at good 21" CRT is $1500.00. They are both televisions but not the same thing. The cost of manufacturing the CRT is not 5 times the cost of manufacturing a television but the price tag is. The difference is profit margin. PHOTOMAN

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