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

To: Stitch who wrote (1106)	8/26/1999 9:51:00 AM
From: Sam	Respond to of 1989

Stitch, It is wonderful to "hear" your voice again, and read your as usual interesting and provocative insights. I want to respond to some of them. 1. Funny how you discount MBA's points. Foxwile's advocacy of the price war had me convinced for awhile, but MBA countered with an obvious point once it is made (this also seems to be Michael Brown's view, it appears from QNTM's last CC where he discussed this in detail, and every analyst that asked questions asked him about it as well): even if, WDC and Maxtor go down, so what? Samsung, IBM, Fujitsu, and HDD will all still be there, with Finis and probably others peeking in from a distance. If the OEMs want to give these others some business, they will. So you'll just have new names in place of the old ones. What will the war accomplish other than making people lose money at a time of solid demand when people ought to be making money? That is the question. 2. You asked, "whats with the eagerness to raise even more cash? Any guesses?" Well, my WAG is what you appear to discount in the previous paragraph: that they will bid for Maxtor or RDRT (depending on if they believe their head operation is too stinky to save). They could get either one of them cheaply, especially under these conditions (is that why these conditions were created and are perpetuated?). If they were simply going to use their own stock for the takeover, they wouldn't do it. But using richly valued VRTS and SNDK stock, it makes more sense. Either they will pay some combination of cash and debt (paying back the debt next year by selling more VRTS and perhaps some ZOOX stock to finance it) or do what QNTM did--swap their own stock, but buy back an equal amount in the open market with their cash. In either case, they need the extra cash to make it work, and end up using expensive stock to finance the takeover. What do you think? Great to have you back, Sam

To: Stitch who wrote (1106)	8/26/1999 10:21:00 AM
From: Robert Douglas	Respond to of 1989

Stitch, I wish I could find the old theme from "Welcome Back Kotter" - "Wecome back, welcome back, welcome back..." Yes, I am still holding my oil patch holdings despite yesterday's reminder that these stocks are very volatile. As long as oil stays above $20 (I think it will), the drilling plans will increase. As you know, I am bullish on Asia and think that the added demand from the region will let OPEC increase their quotas and give them resolve to hold the line. Non-OPEC countries will have to increase drilling substantially just to keep output from falling. One question for you, what's with the eagerness to raise even more cash? Any guesses? I see three possibilities. 1. Just because they can. I suspect they will have some losses to write off against the gains so they won't pay taxes. These losses may come from operations or from restructurings. 2. As Sam mentioned, they may be looking for acquisitions. If this is their plan, I hope they wait. I personally don't think they can ever get value from this type of investment. What assets could they possibly gain? 3. A war chest. Sort of like Ronald Reagan arming up in the 80's. Even if it isn't used, its presence has a disheartening effect on the competition. -Robert

To: Stitch who wrote (1106)	8/26/1999 11:31:00 AM
From: Mark Madden	Respond to of 1989

Stitch, It is really great to hear from you. The eagerness to raise cash must be to purchase their own stock. After hearing your report of SEG improving distribution channels, improving manufacturing strategies and stepping into more automation, I have to believe the management is as upbeat as you are. However, Robert has a good point that raising cash so publicly is a show of force to competitors and a show of risk to financiers of competitors. Their own stock is as good as cash so they could always make a quick purchase if they get the opportunity to pick up some pieces really cheap. Sam mentioned the possibility of a RDRT purchase. RDRT has technology and SEG has always talked about technology with respect. It would sure put them in control of some Western Digital, Maxtor, Samsung and now, Quanturm programs for the short term. Long term they gain technology and scientists but the working relations with other companies would surely go down the tube. Regards, Mark M.

To: Stitch who wrote (1106)	8/26/1999 1:18:00 PM
From: Z Analyzer	Read Replies (1) \| Respond to of 1989

Stitch, It is interesting that you expect Seagate to reduce its workforce in China due to logistical undesirability at the same time that Conner is commencing operations there. Having recently spoken with someone who is quite familiar with Conner, it seemed to me that Seagate's greatest motivation for the current pricing pressures might well be to keep Conner from being able to get the funding needed to get off the ground. Conner is looking at adding about 12 million units of capacity, which would be enough to keep this industry in the doldrums for quite some time. I even hear that Seagate is applying pressure to suppliers to not do business with Conner which would tell me they are quite concerned. I wonder whether Conner, as a nine U.S. company, is in anyway protected by the antitrust and anticompetitive laws of the United States. I also have to wonder how Conner, with 4 GB per platter drives will be able to compete with the one side of one platter drives being brought out today. Further, I have to wonder how much of Conner's anticipated competitiveness with his virtual company is based upon being able to obtain component at today's prices which are unsustainable on a long-term basis since the suppliers will no longer exist if pricing doesn't improve. Is your forecast of declining head counts enough to turn you negative on Hutchinson? Are you still an owner? -Z