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Strategies & Market Trends : LastShadow's Position Trading -- Ignore unavailable to you. Want to Upgrade?

To: LastShadow who wrote (21220)	9/6/1999 10:16:00 AM
From: AlienTech	Respond to of 43080

>>Given that Lehman dn KP own a large chunk of this, its probably a buy for awhile<< Washington, Sept. 3 (Bloomberg) -- Headway Technologies Inc., a developer of parts used in computer disk drives, plans to raise as much as $34.5 million through an initial stock sale. The Milpitas, California-based company specializes in recording heads . . . Prices for disk drives have been falling, putting ''extreme pressure' on parts makers to cut their own prices, Headway said in its filing. In addition, drive manufacturers are using fewer heads as technology improves. ''It does seem a little strange that they are going to go public in this kind of market,' said Gregory Hertzig, an analyst at Dabney Flanigan LLC, a New York-based firm that focuses on distressed companies. ''The may need the capital to fund R&D and they might not have a choice.' Headway's net income fell to $620,000 in the six months ended July 3, from $6.1 million in the six months that ended June 27, 1998. Revenue declined to $72.8 million from $92.6 million during the same periods, while research and development spending rose to $16.8 million from $11.6 million, the filing said.. Seagate Technology Inc. and Toshiba Corp. combined accounted for more than 94 percent of revenue during the six months ending July 3, the filing said. Formed in 1994, Headway's first customer and largest initial investor was Hewlett-Packard Co. In 1996, H-P moved to leave the disk-drive business and said it would sell its Headway stake. Headway's largest investors now include Western Digital Corp., the No. 3 computer disk-drive maker, which holds an 18.9 percent stake. Affiliates of Hambrecht & Quist Asia Pacific Ltd. hold a 56.7 percent Headway stake. Management Headway is led by Chief Executive Mike Chang, 55, and Chairman Ta-Lin Hsu, 56, who also is managing director of majority investor H&Q Asia Pacific. Tu Chen, 64, is vice chairman and a co-founder of Komag Inc., the No. 1 maker of discs used in computer disk drives. One part of the company's strategy is to become ''a significant supplier' of parts for personal computers and computer workstations. Disk drives designed into these desktop computers must be manufactured in high volumes. Headway recently expanded its manufacturing capacity and is providing desktop- computer parts to Maxtor Corp., a computer disk-drive maker, in large amounts, the filing said. Headway also is providing early stage samples of these parts to Seagate and Western Digital. Headway said it must stay abreast of rapid changes in the market, as drivemakers continually seek to offer next-generation products with increased capacity at lower cost. Headway cited the depth and expertise of its research and development team as a factor in its ability to gain market share. The company said it would use proceeds from the stock sale to repay about $12.4 million in notes and for capital expenditures. The remainder of the proceeds will be used for general corporate purposes, including working capital. An underwriting group led by Hambrecht & Quist will market shares to the public. Headway will seek to trade on the Nasdaq Stock Market under the symbol ''HWTI.' Sep/03/1999 15:57 For more stories from Bloomberg News, click here. (C) Copyright 1999 Bloomberg L.P.