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

To: Z Analyzer who wrote (7577)	12/19/1999 5:16:00 AM
From: Mark Madden	Read Replies (1) \| Respond to of 9256

Here is a weekend report on disk drive pricing from a sample of retail distributor drives. The drives include 230 samples from 4 different distributors. Disk drive pricing had a small decrease last week. The weighted average desktop drive price dropped 0.8% last week. The average price of drives less than 11 gb dropped 0.2%. The average price of drives between 11 and 21 gb dropped 0.6%. The average price of drives over 21 gb dropped 2.3%. The average SCSI drive (enterprise) increased 0.2%. The weighted average desktop drive price dropped 1.9% for the last month. The average price of drives less than 11 gb increased 0.3%. The average price of drives between 11 and 21 gb dropped 2.2%. The average price of drives over 21 gb dropped 4.9%. The average SCSI drive dropped 2.1%. The weighted average desktop drive dropped at the monthly rate of 1.0% since the beginning of this quarter. The average SCSI drive price dropped at a monthly rate of 2.1% since the beginning of the quarter. For the two years preceding this quarter the average disk drive price dropped about 5% per month. These reports use the term ?weighted average?. The weighted average assumes the sales of disk drives are 43%, 36% and 21% for the respective capacities of <11gb, 11gb to <21gb, >21gb. Since the smaller capacities receive more weight, the changes in the larger capacities do not impact the weighted average a large amount. However, most of the price change action is occurring in drives with capacities greater than 17gb. The price reductions seem to be initiated by new families of drives with high capacity. Here is the percentage of sampled drives with capacities over 17gb that had price reductions in the past two weeks. Maxtor 82%, Fujitsu 66%, Seagate 62%, Western Digital 56%, Quantum 55%, IBM 25%. The average reduction was $13. Although these price reductions will not have a large impact on near term earnings, they can hurt the future profitability. Many of these drives are just beginning their product cycle and may be around another 12 to 18 months. We have to hope that the price reductions over the past two weeks are just adjustments for the new drives fitting into the supply/demand market. If the price reductions continue they will spoil the opportunity for profits in the next quarters. Pricing over the next several weeks will give us the answer. Regards, Mark