Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Z Analyzer who wrote (9032)	4/2/2001 4:50:40 AM
From: Sam	Read Replies (1) \| Respond to of 9256

Quantum Shareholders Approve Sale of Disk-Drive Unit to Maxtor By Don Clark Staff Reporter of The Wall Street Journal April 1, 2001 An era is ending for Quantum Corp., which is shifting its focus and expecting to make some acquisitions along the way. Shareholders of the Milpitas, Calif., company Friday approved a deal in which Quantum will sell its venerable disk-drive business to Maxtor Corp. That will leave Quantum with a business selling entire storage systems, including tape drives and a new generation of appliance-like devices known as NAS, for network attached storage. Michael Brown, the company's chief executive officer, said his slimmed-down company has about $370 million in the bank and has been generating about $200 million to $300 million in cash flow each year. Some of that money may be used to pick up smaller companies that will bolster the storage-systems business. "We've done about an acquisition a year in the past," Mr. Brown said. "There are a number of possible acquisitions that would complement our business." Mr. Brown didn't name any specific candidates. But he said any deals could span the range of Quantum's new activities, including tape drives, disk-based storage systems and services to maintain them. Quantum last year established a tracking stock to reflect the storage-systems unit, called the DLT & Storage Systems Group . Once Maxtor takes over disk-drive manufacturing, the corporation's headcount will decline to about 3,000 from about 7,000, Mr. Brown said. On March 20, the group slightly lowered its earnings guidance for the fourth fiscal quarter ending Saturday. But the company said it continues to expect sales growth of about 30% for its storage-solutions businesses in the fiscal year, a prediction Mr. Brown reiterated Friday. Meanwhile, Mike Cannon, Maxtor's president and CEO, said he plans to go aggressively after the market for consumer appliances. Besides advanced set-top boxes and personal video recorders, a new generation of video-game systems are expected to include hard disks to store data, he said. Maxtor is mainly now known for supplying the computer industry. And Seagate Technology Inc. last November won a multiyear contract to supply Microsoft Corp. for the forthcoming Xbox, one of the first new game systems with a disk drive. Asked if Maxtor might have won an order from Microsoft, Mr. Cannon said he had "nothing to announce" with regard to that company. But deals shouldn't be long in coming, he hinted. "You should expect to hear we will be engaged in game applications," Mr. Cannon said. "I think that will be a huge opportunity for the industry." Mr. Cannon said the opportunity in consumer electronics compares favorably with the personal-computer business, which consumes roughly 150 million drives a year. "Within five years there could be an equivalent number of drives used in consumer electronics," he said. As a result of buying the Quantum's Hard Disk Drive Group , Maxtor believes it is now the largest drive maker, both in terms of unit shipments and the strength of its balance sheet. Mr. Cannon said it will have $700 million in cash, $200 million in long-term debt and 10,500 employees. In addition to competing with Seagate, which recently went private, Maxtor will be competing with Quantum, though not as it used to. Although it no longer makes drives, Quantum sells systems that use disk drives and are known as NAS, for network attached storage. So does Maxtor. Mr. Cannon said he also had high hopes for that business, based in part on an arrangement with Microsoft under which it will use a version of the Windows 2000 operating system in NAS devices, rather than the Linux operating system. "We are getting a very positive response to that," he said. Write to Don Clark at don.clark@wsj.com