Tech,
"Secondly, I dont think QNTM is a big supplier to CPQ. Quantum's bread winners are HP, Apple among others."
Wrong. CPQ was their top customer last Q, and has been for awhile now. An excerpt from my notes from the last CC:
<<QNTM says they are the only vendor to qualify drives at all top 10 PC vendors, and are number one suppler at top 4. CPQ and HWP accounted for 14 and 12 percent of revenue, respectively, top 6 vendors (includes GTW, AAPL, IBM and DELL along with the other two) accounted for 44% of revenue (total, including tape and drive). However, their desktop business was only marginally profitable despite "significant" improvement in GM Q to Q.>>
Perhaps one silver lining is that QNTM sells a lot of BigFoot to CPQ, and CPQ said that part of the problem (as usual) was product mix, which is another way of saying that they are selling a lot of low margin cheap boxes which is what BigFoot goes into. On the RDRT thread a few days ago, someone posted comments from an SSB analyst (John Dean? not sure who is there now, with all of the mergers in investment banking) which said that QNTM is comfortable with the notion that their high end business will break even in Q2 if FY99. That in itself will be a big improvement. Also there should be no operating losses in the heads business this quarter.
All in all, I would stick to a guess of .33 or .34 for the quarter. The bigger questions, as usual, are demand and product mix going forward. Is the 6.8g disk qualified or close to qualifying at their main customers, and ready for volume shipment in the June Q? What effect if any is Finis Conner's new enterprise having on demand (and ASPs) from CPQ for the next quarter or two? How are DLT and ATL sales holding up? Z was correct in saying earlier that beta testing for SDLT won't happen until summer, with volume shipments not occurring until later in the year; is that affecting DLT sales now? How are they going to manage that transition? We know that there are at least two companies making digital recorders (TiVo and Replay) that are just hitting the market now and that use QNTM drives; it is probably too early to tell how they are selling, but presumably someone has done some market research, and has some projections on how many of these boxes they expect to sell. What is the ramp like for QNTM? Any other deals like those in the wings? And, of course, what is happening on the tracking stock front, when will it take place, what has the IRS said about its tax liability?
A lot of questions, not many answers. My earlier WAG was that QNTM would be at 20 3/16 going into earnings, I would lower that now, to about what it is, around 18, though we will probably see some bumps above and below that number in the next two weeks. My WAG only. |
