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

To: Stitch who wrote (8969)	1/13/2001 11:42:39 PM
From: Yogi - Paul	Read Replies (2) \| Respond to of 9256

Hi Stitch, <<Asia, for example, should enjoy 24 - 28 % unit growth rate for the next few years as long as we don't see a slip back into the R word.>> Compaq and Dell still strong in Asia? <<....PVRs, is forecasted to be only about 18 million of the 350 million drives shipped in 2003.>> Tough to forecast a compelling consumer device as it largely depends on the price point but, if the drive companies insist on a reasonable profit I'd say that is about right... more if they don't. <<We now look for the PC market to grow 12% in units and 1% in revenue in C2001, versus 13% and 16% respectively in C2000. >> Ambitious. I guess the bottom line is that it is real easy to be negative about the pc sector and disk drives at this point in time... almost as easy as it was to be positive about the dot coms in Feb '00 This coming week will be damn interesting <<Microsoft leads a parade of bellwethers reporting revenue and earnings next week: Intel (INTC: news, msgs), IBM (IBM: news, msgs), Sun Microsystems (SUNW: news, msgs) and EMC (EMC: news, msgs) will come out with their numbers. Also reporting will be Advanced Micro Devices (AMD: news, msgs), Apple Computer (AAPL: news, msgs) and KLA Tencor (KLAC: news, msgs).>> cbs.marketwatch.com Paul

To: Stitch who wrote (8969)	1/17/2001 1:24:55 AM
From: Gus	Read Replies (1) \| Respond to of 9256

All in, the key in PCs is to remember that this is an industry that is no longer experiencing accelerating growth rates.... Sounds familiar? Analyst predicts PC vendors must consolidate or die By Larry Barrett Special to CNET News.com January 16, 2001, 6:10 p.m. PT Bear Stearns PC analyst Andrew Neff after the bell Tuesday fired off what he called a "manifesto," recommending massive and immediate consolidation of the major U.S. PC vendors. Some of his contemporaries strongly disagreed. After watching profit warning after profit warning from major PC makers in recent weeks, Neff said the industry is at a "critical stage." The PC sector will unravel because of overcapacity, a problem that has plagued other industries. PC stocks will continue to erode unless companies take "concrete steps towards consolidation." Among Neff’s suggestions: • Dell should buy IBM’s PC business and Gateway to increase share, its presence abroad and strengthen its consumer operations. If it doesn’t get IBM’s PC business, it should look for acquisitions in Europe and Asia that fit its direct model. • IBM needs to unload its PC business to either Dell or Compaq and get a services deal. • Hewlett-Packard should buy Compaq, parlaying its profitable printer business and strong brand name into a leadership position in the sector. • Compaq should sell out to HP. • Gateway should retrench and sell out to either Dell or a major Japanese player such as NEC, Toshiba or Hitachi. • Apple should play to its strength in industrial design and design the best computers for the Wintel market. Abandon the PowerPC architecture and port the Mac OS X over to Intel architecture. "It is time for consolidation and it is better for a company to make it happen than to wait for it to happen to the company," Neff said in the lengthy and often colorful research report. "From an investor standpoint, the PC industry will be an unattractive segment until we see concrete steps towards consolidation." Neff’s timing comes ahead of Apple’s fourth-quarter earnings report Wednesday and on the heels of Gateway’s surprisingly awful fourth-quarter results. Neff's report is sure to be controversial as investors digest it Wednesday. Bear Stearns, which has performed underwriting work for both IBM and HP, said it will hold a conference call for clients at 7 a.m. PST Wednesday. Needham & Co. analyst Charles Wolf said the report was the "height of stupidity" and an overreaction tainted by the current woes of PC stocks. "There’s no such thing as overcapacity in the PC industry," Wolf said. "There can’t be consolidation in a variable cost industry." Merrill Lynch analyst Steven Fortuna said weak demand and slumping stock prices are legitimate concerns for the PC industry, but also a big part of why these companies won’t be in any rush to consolidate. "There’s not much currency there right now," he said. "These companies aren’t looking for any major consolidation at this point. Put it this way: If PC demand had remained as strong as it was in the past two or three years, Gateway would be at $57 a share not $17 and this wouldn’t even be up for discussion." Both analysts point out that worldwide PC sales are likely to improve by at least 10 percent in 2001 and maybe a point or two higher in 2002. In anticipation of his critics, Neff noted in his report that he may be viewed as an alarmist. "Our key point is not that unit growth won't continue--we think that it will--our argument is that there is fundamental overcapacity in the PC industry which must be wrung out before we can see the resumption of a favorable environment for margins," Neff said. "Our point is that--like other cyclical businesses--this overcapacity has to get worked out (through levers on demand or supply)." Wolf said none of Neff’s proposed mergers make sense. "Why would HP buy Compaq?" he said. "What do they buy? They’d get nothing. There’s no technology there. Gateway’s not going to sell out. This is insanity." news.cnet.com