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

To: Sarmad Y. Hermiz who wrote (7744)	1/8/2000 7:53:00 PM
From: Mark Madden	Read Replies (2) \| Respond to of 9256

Sarmad - "So my guess is also No price drop in disk drives in January." I hope you are right. The process I am using for pricing doesn't predict future pricing but the longer prices remain stable, the more confident I feel that they will continue stable. No drive manufacturers want to start the downward spiral again. The real test will come when the demand slows. As I remember, conference calls were positive in January last year but they were followed with a number of analysts predicting a Y2K slowdown for the first half of the year. That will change this year. Regards, Mark OT - How do you make quotes in italics?

To: Sarmad Y. Hermiz who wrote (7744)	1/9/2000 10:01:00 PM
From: Mark Oliver	Read Replies (1) \| Respond to of 9256

<Mark, Looking at the charts, DD stocks started to collapse around Jan 15, 1999. I don't know what the catalyst was. Whether the CC's or whether investors were looking at disk drive prices. I know that I asked you this before, but the answer may be important for trying to be ahead of the analysts.> I'd say disk drive stocks started caving in last year because of several factors. -Asian crisis was getting pretty bad which meant they didn't think they would get the growth from that market. -ASP's for PC's were much lower than people thought which meant only the cheapest drives were selling. I believe the transition to GMR caused big problems in costs and they burned through a lot of over stocked drives as they tried to reduce rising inventories. -Compaq, HP and IBM all decided that they would need to fight Dell by shifting to Build to Order. Naturally this caused a major problem for inventory. So, they had to fire sale older drives. Once you start selling drives cheap, you can't go back. -Finally, reality was setting in that no bleeding edge product could entice buyers to pay premiums. The bleeding edge was now a method of reducing costs by cutting components. Sure. Well, this plan didn't work. Blood flowed. Of course, this was made worse because analysts usually wait for the share price to fall by 50% at least before they start cutting forecasts and bringing prices even lower. Quantum was supposed to be a good deal as they had DLT, but then sales didn't live up to expectations. WDC tried to solve problems by working with IBM, but that didn't help. Fujitsu continued taking market share. The high end caved as they tried to find a way out of desktop hell. Everybody had tons of capacity and lots of inventory and buyers were going build to order. Now, we see SEG trading based on their holding in other companies. The market looks for bottom feeding choices. There could actually be a chance for inventory to be corrected and demand to be rising. They could even be cutting costs enough to nearly make money. The consumer drive is becoming a reality and will add a good demand. Perhaps we are seeing real new need for bigger drives with all the music and video that will be streaming over a significantly rising broadband Internet community. Regards, Mark