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Technology Stocks : QUANTUM
QNTM 9.940-0.6%Dec 5 9:30 AM EST
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To: Toko who wrote (8604)4/2/1999 11:37:00 AM
From: TechMeister  Read Replies (1) of 9124
 
Thanks all for the response. Looks like I managed to wake up the sleepy QNTM thread after all.

I was asking specifically about operating losses not "restructuring or one time charges". There is a big difference. If I remember, QNTM announced the dissolution of MKQC in October, which was still in the middle of the 4th Q of 98. Hence, is it possible that they still had operating losses in the Dec quarter due to the heads business and thats a good thing because it means that this quarter, EPS should be up by atleast 10 cents. Anyways, I think its hard to read into the numbers. I think QNTM will make close to 36 cents.

Regarding valuation: here is my thinking. DLT slaes are close to $400 million per quarter and growing at 25% annually. And it has a net profit margin of 10% (I think it may be higher. Gross margins are close to 35%). So that means $200 million in earnings in the next year from DLT alone. Thats an EPS of $1.20. Assuming a growth rate of 25%, we can accord a PE of 25 which means DLT stock will be valued at $30.
The disk drive stock ought to be valued roughly around $10-$15 owing to its 'dog' status. SO that means QNTM ought to be valued at 30 + 15/2 = $38 right now. So I guess this tracking stock thing is the right strategy for QNTM.
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