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

To: Mark Oliver who wrote (7804)	1/15/2000 1:48:00 PM
From: Mark Madden	Read Replies (5) \| Respond to of 9256

Here is a weekend report on disk drive pricing from a sample of retail distributor drives. The drives include 316 samples from 6 different distributors. Disk drive pricing remained stable last week. The weighted average desktop drive price dropped 0.2% last week. The average price of drives less than 11 gb increased 0.1%. The average price of drives between 11 and 21 gb dropped 0.1%. The average price of drives over 21 gb dropped 0.7%. The average SCSI drive (enterprise) increased 0.8%. Last quarter the average weighted monthly price drop was 1.5% for desktop drives. The average monthly price drop was 2.7% for enterprise drives. We have yet to see the seasonal price drop that normally occurs at the end of the 4th calendar quarter. How did the pricing changes compare to the Seagate quarterly conference call? The pricing changes came very close to the reported price changes by Seagate. However, they did not provide enough information to predict earnings. The stable pricing gave the indication that demand was strong. That was not the case. Seagate stated their pricing dropped 7.5% for the quarter. The pricing data samples for Seagate desktop drives dropped 6.18% for the quarter. The Seagate enterprise drives dropped 13.7% for the quarter. Analysts estimated Seagate sold 2.3 million enterprise drives of their 10.3 million drives total. Applying the estimated percentage of enterprise drives to the price drops gives us a price drop of 7.81% for all Seagate drives. This is reasonably close to the 7.5% stated in the conference call. Also, Seagate stated enterprise drive prices fluctuated in price during the month of December. This was evident from the pricing reports with varying price increases from -0.9% to 0.3%. The stable disk drive pricing did not mean strong demand. Many December quarters have seen 10-20% increases in drive revenue. Seagate explained their lower revenue as a change in mix as they had trouble producing in the lower enterprise sector but gained units in the lower priced EOM market. Still, their units only increased 6% for the quarter. The 6% unit increase is not strong considering their units increased 24% for the entire year. Seagate indicated the stable pricing may have occurred because the prices were already at an unprofitable level. The pricing reports do not indicate quantity of units shipped. They may indicate the ratio between supply and demand. If this is the case, the stable prices only indicate manufacturers did not overproduce last quarter. I will look to further conference calls to confirm the theories we are formulating. Regards, Mark