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Technology Stocks : Seagate Technology - Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Gus who wrote (1719)	4/13/2000 11:09:00 AM
From: Stitch	Respond to of 1989

Gus, <<By the way, RDRT just consolidated its entire operations in Thailand, it seems, as Sumimoto took a $100 million estimated charge for dissolving its JV with RDRT. Moving closer to Seagate, Thailand's single biggest employer, and IBM? >> Maybe, but I believe it is also about Govt tax incentives with the Thai government upping the ante. In addition the logistics have been a headache. Keep in mind RDRT acquired that location through their acquisition of Sunward. There was no other specific reason for the facility to be in PI away from the HGA source (PI was exclusively a head stack operation). Interestingly Morgan Stanley Dean etc had this to say about RDRT today: Read-Rite (RDRT, $4, Neutral, down 22% in 14 days) We think that a couple of the disk drive stocks got hit with a "buy on the rumor, sell on the news" phenomenon this quarter. Interestingly, like last quarter, the disk drive stocks started to peak out on the day that Maxtor pre-released a positive surprise this quarter. We believe that Read-Rite had a better than expected quarter based on strong unit demand for disk drives. The company already pre-released (4/6) that it had approximately $17 million more revenue than our estimate and also indicated that gross margins and operating margins should improve sequentially. We get the sense that Read- Rite thinks that break-even is now more solidly in its sights. In addition, Read-Rite announced restructuring activities. Read-Rite said it would dissolve Read-Rite SMI, its joint venture with Sumitomo Metals Industries in Japan and also stated that it would consolidate its Philippine head stack operations into the company's operations in Thailand. As a result, Read-Rite hopes to save approximately $15 million quarterly. We originally forecast EPS of ($0.92) on revenue of $137 million (down 33% Y/Y and up 20% Q/Q) and we expect the company to report EPS on April 26 after the close.