Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Seagate Technology - Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Kevin Linder who wrote (973)	7/7/1999 2:50:00 PM
From: Robert Douglas	Read Replies (3) \| Respond to of 1989

Kevin, I do like what Luzco has done with the VRTS deal, however it seems to me that what management should be doing is to consider diversification. They have a tremendous amount of cash and a large (especially considering the VRTS stock holding) stock investment portfolio that they can leverage. I think a purchase outside the drive industry would allow them to reestablish some credibility with Wall Street. It has been brought to my attention, by an inactive SI legend, that for Seagate to use their VRTS goldmine that they would need incur taxes of approximately 40% on the sale of the shares. Since I don't believe that management would find this an acceptable source of funds, the usefulness of the Veritas stake in diversifying is limited. Seagate still has a nice cash kitty at their disposal. I hope they are still repurchasing their own shares. It's as good an investment as I can think of. <g> Re: profitless prosperity. Unless this analyst you were reading is very old, I doubt he coined the phrase. It is one of my favorites and is older than I. (41 and counting) -Robert

To: Kevin Linder who wrote (973)	7/7/1999 10:21:00 PM
From: Sam	Read Replies (1) \| Respond to of 1989

Kevin, Robert, The senior management of these companies already know that price wars are better off avoided--in general. Somtimes, like the Kosovo/Yugoslavia bombings, they are inescapable, though. A few years back, SEG, QNTM and WDC dominated the drive business, with IBM sort of hanging in there with most of their capacity going to their own captive needs. Both we investors (and most analysts) and the companies themselves (the "Big Three", as they were called) became complacent, and stopped pushing areal densities quickly enough. Hyundai/Maxtor and Fujitsu saw their opening, they quietly plotted and planned and attacked the Big Three at the same time, in the fall of 97. This is when the "price wars"--the new incarnation of them, at any rate--began. They have been compounded by IBM becoming more aggressive and Samsung attempting to become a player. Never forget that someone always benefits (or thinks that they will benefit) from these episodes. Too much capacity breeds them. Those who have strong balance sheets or who are sufficiently desperate to cover overhead and gain or maintain share begin them until their goal is satisfied. Right now is a great time for those with strong balance sheets to begin a war, during a typically slack season. The best time for those who want to pick up market share to begin something would be in Sept, at the beginning of the peak season. This whole thing should't make anyone who thinks that their company is a long-term survivor that unhappy, given the circumstance that 7 companies apparently have ambitions to be one of the eventual Big Three (or Four? no more than that, I would guess] in the drive business in the next millenium. The airlines went for years without anyone making money either. Eventually they got it more or less right, even while still be cyclical, and they made some serious money. So will this sector, at some point. All my opinion only, obviously.