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 : Western Digital (WDC) -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (10820)	10/17/2003 9:53:32 PM
From: Sarmad Y. Hermiz	Read Replies (2) \| Respond to of 11057

Sam, re the Lehman report. First, thanks for the e-mail. The report by Harry Blount is a good summary of the risks and opportunities facing WD's management. But I disagree with him on the earnings for the Sept Q. WD will write down $50 m of the cost of the equipment and associated charges all in one quarter. So the q will be break-even. I think it is incorrect to use after-charge number for assigning price based on P/E. He should use either gross margin, or earnings from operations. Then the estimated earnings from ops in '04 will be $1.00, instead of $0.76. And with a P/E of 18, then the price should be $18. Very similar to the price he derived from free cash flow yield - $19/sh. I'll just add that in late Sept, Dell had a 3-day sale on WD 200GB drives. These drives use 6 heads each. I have heard these use 80 GB heads but with downgraded performance. Very possibly this is where the un-worthy 80 GB heads went. Each drive uses 6 heads. So, easily a 100,000 heads could have been used in this promotion. If my impression that 200 GB drives use downgrade 80 GB heads is incorrect, I'd appreciate a correction. Sarmad