<<Truth is VRTS saved their ass (and mine, and Sam's) these last 2-3 years but now even the Savior has fallen.>>
Got that right. At least as far as Seagate goes, and as far as making money last year goes. Happily I got out of most of my SEG in the 60s, the rest before VRTS tanked. Won't help this year, not much will, I'm afraid. It is bath time for me.
However, on a more forward looking note, we now have rumors of Fujitsu, facing their worst year ever, exiting the desktop drive business (see article below). Wonder if Maxtor, WDC, or SEG might finally make a little money if these rumors prove true?
JP Morgan Ups Maxtor;Fujitsu Exiting Desktop Segment
Updated: Tuesday, July 31, 2001 10:45 AM ET
By Carla Mozee
of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Investors snapped up shares of U.S.-based
hard disk drive makers Tuesday after a Wall Street firm said the
companies stand to benefit from Japanese computer giant Fujitsu
Limited's exit from the business.
But an American spokesman for Fujitsu, which is headquartered in
Tokyo, told Dow Jones Newswires that the company hasn't announced
any such departure from the hard disk drive industry.
The Fujitsu spokesman, Korendo
Shiotsuki, did acknowledge that
rumors of such a move have been
circulating in the marketplace.
Shares of Maxtor Corp. (MXO,
news, msgs), a Milpitas, Calif.,
hard disk drive maker, recently
changed hands at $6.57, up 6%.
Read-Rite Corp. (RDRT, news,
msgs) was up 9.2% to $4.65, and
Western Digital Corp. (WDC,
news, msgs) was up 6.8% to
$3.59.
Sparking the moves was an equity research brief from JP Morgan
entitled "Technology and Telecom Daily," in which J.P. Morgan analyst
William Lewis was said to have raised his investment ratings on the
three stocks. His investment thesis, the note said, was based on "...the
exit of Fujitsu from the desktop segment."
A copy of Lewis' full research note, however, doesn't flatly state that
Fujitsu will exit the hard disk drive business. Instead, Lewis wrote that
the Fujitsu rumors exist and that "we now expect the company to
announce that it will pare down its production of disk drives, particularly
those for the desktop business."
Later in his note, Lewis said: "We believe that Maxtor and Western
Digital will both benefit from Fujitsu's departure from the desktop
business."
J.P. Morgan's Lewis continued in his research note, saying "We believe
Fujitsu's financial miscues served as the catalyst to re-evaluate its
businesses."
The analyst also said he anticipates Fujitsu will shift resources to its
high-end and mobile drive segments, which he said typically are more
profitable and have fewer competitors.
His comments come on the heels of Fujitsu's first-quarter results, in
which the Japanese company said that sales of small form factor
magnetic disk drives for desktop personal computers declined. Fujitsu
blamed slow sales in the U.S.
Suffering from the effects of a world-wide technology slump, Fujitsu
recently said it planned to take a restructuring charge of 300 billion yen
($2.43 billion) this year.
In 2000, Fujitsu had 13% of the total disk drive market share, behind
Maxtor, and the privately-held Seagate Technology and tied with
International Business Machines Corpo. (IBM, news, msgs), but in the
first-quarter of this year, Fujitsu's share reportedly slipped to 10% of the
total market and 9% of the desktop market.
"We are anticipating an increase in demand for (Maxtor), (Read-Rite),
and (Western Digital) as Fujitsu winds down its operations and its
market share is re-allocated," said Lewis in his note.
"While it will take the better part of a year for for Fujitsu to complete such
a move, we do believe that these companies will see some near-term
pick-up as industry inventories are low," Lewis said. "Additionally,
Read-Rite will benefit as share shifts to its two largest customers (Maxtor
and Western Digital."
Lewis said he sees Maxtor stock hitting $9 in the next year and Western
Digital reaching $5. He reiterated his $7 price target for Read-Rite.
-By Carla Mozee, Dow Jones Newswires, 201-938-5154 |
