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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: Stitch who wrote (7250)	10/23/1999 3:26:00 PM
From: T Bowl	Read Replies (1) \| Respond to of 9256

Stitch - <<I am thinking of taking the plunge on your old favorite: HMT.>> Yeah, me too. I just wish I would have done it before the Ern announcement ;) Yes, they are in a much better position than KMAG, but how will the excess capacity problem be resolved? (Unless the market gets to the point that KMAG's inline equip simply is not up to the job.) Let me know when that happens and I'll buy. They've played the game properly during this down time(they've written off a lot of good equip), so they might be prepared for the "good ole' days" to return and show short term EPS growth... But they still have several big factors that will present problems. Remember, they are only producing <6mil units on equipment that is capable of producing 12mil+(they'll present data showing they are currently running at a decent utilization, but that's because they've written off at least 7 good lines). Anyway, the last time they made decent money was in JanQ98 when ACP was $6.75 and ASP was $10. Now they're at an ACP of $7.79 and ASP was $7.86. You might be able to acct for the ACP rise due to low cap util, but the ASP drop is a big problem. I can't actually work out how they'll ever make the high GMs again until the excess cap goes away and the ASPs go back up. KMAG's failure(not just the company, but the equip) is what is necessary for this to happen IMO. todd