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Technology Stocks : Western Digital (WDC) -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (10481)	9/21/1999 6:33:00 PM
From: T Bowl	Read Replies (1) \| Respond to of 11057

Sam - Nah, I'm not short WDC, but I honestly think they are done. As I've said before, I hope and pray SEG turns up the heat big time! A few quick and exciting facts about this sinking ship: 1) Including the SepQ99, WD will have lost money for 8 consecutive Qs… 2) Looks like they will lose $115mil or so from just ops this Q, then there is also the costs associated with shutting down the Singapore desktop operation. 3) Add up the last 8Qs and you get losses totaling $800million+(that doesn't include the shutdown costs this Q). (eight hundred freakin' million bucks!!!) 4) Now, I've only got data back to DecQ94, but before the MR transition days, (anyone remember the TFI glory days?), WD was profitable for 12/twelve/XII consecutive Qs! But during those glorious days of old, WD only pocketed ~$500mil in profits. 5) What's the lesson of #3 & #4? (Kam would be the best to berate them here..) They partied too long living off of outdated technology. They Ignored the complexities of the MR transition. They made fundamental mistakes in their business plan. Heck, they bought BACK shares of stock with the cash they were making!! Apparently they forgot about the cash reserves needed for the lean years. They will fail. All that is left is the crying about "ooh, the pricing pressures, oooh" I do not feel for them in the slightest. I hope Haggerty learned a lesson, but I doubt he did. Leveraging old technology and ignoring the bleeding edge has never worked and never will. The profits ultimately come from good execution and being TTM. Conner, are you listening? {thanks for that lesson LK} 6) They are quickly running out of cash on hand. Sure, they'll twiddle the books, or they'll con someone into throwing good money after bad, but the fact remains that they only had $225mil in cash last Q. 6b) Shareholder's equity will be down to -$250million this Q(that's a neg #…) 7) Anybody buy that "we don't want to flood the market with excess inventory" baloney? Truth is that they need to work down the inventory to build cash IMO. It was already a VERY low # for them last Q($144mil). This is all smoke and mirrors friends. Oh yeah, besides, their process isn't refined enough to compete with others in this market(read: their drives cost too dang much to make). Every DD they make, they lose $$ on. Cutting production is their only option. It's a win/win situation for them. Their only hope is to keep cutting production to minimize losses and pray that a miracle occurs and they figure out how to make a profit. It looks as though the last attempt(the IBM agreement) isn't working. 8) As you pointed out. QNTM and MXTR are first out of the box with 10GB pdcts. Couple those announcements with the 2 fastest ramping capabilities in the sector and it spells trouble for the others, esp WDC. (SEG will live off of the U series and the high end). 9) I read on the Yahoo thread that HMTT is in OT mode for someone. Who could that be? Their biggest customers are WDC, MXTR and IOM. It ain't IOM. This announcement eliminates WDC. My gut says MXTR is continuing to execute flawlessly. And do you know who has been the biggest victim of MXTR's success? doubleuuudeeeceee So, I'm bearish, but not short. Missed that sinking ship a while back. Whew! Boy do I feel better. todd And yeah, I'm long MXTR.