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Technology Stocks : Disk Drive Sector Discussion Forum
WDC 150.99+8.6%Nov 24 3:59 PM EST
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To: Mark Oliver who wrote (5826)3/11/1999 1:21:00 PM
From: LK2  Read Replies (1) of 9256
 
RE--is the QNTM tracking stock a parlor trick, or an exit from a low-profit business?

In the stock market, parlor tricks can result in real changes in stock price. Almost everyone agrees that a stock split doesn't change the underlying fundamentals of a company's stock price. But in the short term, at least, a stock split often has a positive effect on the stock price.

Will QNTM exit the disk drive business some time in the future? Who knows? They could eventually either sell the business or spin it off to the shareholders. But I would guess that any such move would be far into the future. There have been no signs the company is thinking along those lines currently, in spite of the tracking stock.

Remember, there was a short-term pop in the stock price when the tracking stock announcement was made. And there could be more room for stock price improvement, because it does focus attention on the faster growing tape business.

The digital VCR sounds interesting. Depending on cost, it could replace the traditional VCR. And the digital VCR certainly wouldn't be limited to high-end digital TVs.

One problem is that traditional VCRs have come down so much in price already. What used to be a high-end VCR now sells in the $100-200 range, which is lower than what the low-end VCR used to sell for.

And people like Yogi prefer to download their content from the Internet. So you have to figure all those hold-outs into your profit projections as well. <G>

Regards,

Larry
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