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Technology Stocks : Quantum Disk Drives (HDD) -- Ignore unavailable to you. Want to Upgrade?

To: Thomas DeGagne who wrote (129)	7/26/2000 6:30:12 PM
From: M. Frank Greiffenstein	Respond to of 179

The essence of the CC was that another price war is starting. It was not put in those words, but it might as well have been. DocStone

To: Thomas DeGagne who wrote (129)	7/26/2000 7:08:39 PM
From: Mark Adams	Read Replies (1) \| Respond to of 179

Access to the conf call via traditional phone line: 800-405-2236 (Domestic) 303-590-3000 (International) Access Number: 730634 I think the drop was a result of the downgrade. What I wonder is what I missed that encouraged SSB to downgrade all the way to neutral. That makes it worth taking a second look. The next question is, given a drop of this size, is it now worth an upgrade from neutral to LT accumulate? www2.marketwatch.com Could be the added cost of bringing on another line, along with the uncertainty associated with build limitations in the enterprise class drives drove the near term execution risk higher. My back of the envelope calculations had HDD trading at Cash, with AR enough to cover AP.

To: Thomas DeGagne who wrote (129)	7/26/2000 8:49:48 PM
From: Gottfried	Respond to of 179

Thomas, I have not listened. Gottfried [end]

To: Thomas DeGagne who wrote (129)	7/26/2000 11:02:54 PM
From: nonzeroa	Read Replies (2) \| Respond to of 179

My notes from the conference call: HDD had $675MM in revs on 7.5MM units ($90 AUP) HDD saw a slowdown in desktop drives in the second half of the quarter that HDD attributes to the microprocessor shortage. Consumer electronics shipments tripled from the prior quarter and is up 10x from the prior yr quarter. HDD has shipped over 250,000 drives cumulatively to the PVR and Audio Jukebox markets. HDD shipped 738,000 enterprise drives in the quarter w/ a 24% gross margin. HDD claimed a 15% market share versus an 8% market share in last year's quarter. HDD believes they have a 25% market share in the Intel based server market, making them the 2nd largest supplier. HDD's enterprise business faces a component shortage which may limit calendar 3rd qtr enterprise shipments by 10%. HDD bought back 3.2MM shares for $35MM in the quarter. HDD's two largest customers were Dell at 13% of sales and Ingram Micro at 11%. Desk top margins went to 11% from 13% in the prior qtr and enterprise margins went to 20.2% from 23% in the prior qtr. HDD saw a SUBSTANTIAL decrease in desktop pricing at the end of the quarter and expects it to continue. Aggressive desktop price reductions combined with the enterprise component shortage cause the company to expect a FYQ2 LOSS. Q&A Highlights Expect the component shortage to probably end this quarter. HDD thinks they have 5 weeks of inv in the channel and the rest of industry has 6 weeks in the channel. HDD thinks consumer electronics will reach a 500K run rate annually (I think that refers to the calendar 4Q). HDD contrasted current environment vs last year and the start of last year's big price war. HDD said there isn't as big a push for sub $500 computer and accompanying pressure on component prices, and that no competitors are attempting to double their market share. HDD said their desktop build has been adjusted (reduced), but still expect a small increase in units this quarter. Enterprise units are on allocation, but build will be constrained by the component shortage. These are just my rough notes; I hope they help. Anyone have any comments/perspective on the call?