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Technology Stocks : QUANTUM -- Ignore unavailable to you. Want to Upgrade?

To: Z Analyzer who wrote (4294)	10/22/1997 9:37:00 PM
From: Praveen K. Mandal	Read Replies (3) \| Respond to of 9124

Conference Call Notes (don't guarantee accuracy): * 6.6 billion drive units shipped * High-End: - Softer than anticipated demand - Price pressures - Excess inventories - Constituted 9% of sales this Q; down 6% from previous Q - $20 million loss (after taxes) - Saw double digit price declines from Q to Q. - Inventory levels are on the high end of normal. - Gross Margin below model - People are acting responsibly - Banking on next generation: Atlas 3 and Viking 2 products (should start to contribute in March Q) - Goal is to "win in high-end segment" because of margins. - Goal is to be able to compete profitably under various market conditions and, hence, will be evaluating the steps needed to realize this goal. * Head Business: - 49% loss reflected in results - 15-20% of MR Heads come from MKQC - Losses should narrow by March Q but is dependent on yield * Desktop: - 6.3 million desktop drives shipped; 300,000 more than previous Q - Accounted for greater than $1 billion in sales - Gross Margins were 15% with 7% operating expenses - Price decline was normal and pricing is expected to be stable going forward - Saw strength in distribution channels - Believe to have greater than 50% market share in 4Gig and greater desktop market - Fireball SE (2.1 Gig platter drive) is being qualified now - Momentum in BigFoot products - Saw BigFoot acceptance in commercial systems - Top 2 customers: Compaq (11%) and HP (10%) - Desktop margins expected to remain same for the historically strong Dec Q - There will be a new unannounced BigFoot product next week - Expanding high capacity desktop business DLT: - $339 million in sales - Sales up 27% from June Q - Saw major customers commit to DLT (e.g. Digital, IBM, etc.) - DLT7000 accounted for 30% of total DLT units shipped - Media Sales accounted for 20% of total DLT revenues - There are 3 market segments: + 1 - 10Gig + 10 - 100Gig + 100Gig - 1TeraByte - Currently the "defacto standard" in the 10-100Gig market (i.e. medium range) - Focused on migration of DLT to >100Gig market with help of NFR technology from TeraStor - Gross margins goal for DLT remains at 30-35% - Expect 100% DLT growth but slower sequential growth than this past Q - Growth rate of > 50% is expected over longer term General: - Operation expenses decreased to 9.1% of revenue - Expect to increase R&D expenses as percentage of revenue in near term - Long term operating expenses goal is 9% of revenue or less - Balance Sheet grew from $366 million to $638 million - Registered 4th consecutive Q of positive cash flow - DSO (days sales outstanding) increased from 56 to 60 days because of back loaded Q. This will come down in Dec Q because Dec Q is more linear. - Cash increased to $4.70/share. Last Q was $2.80/share and same Q last year was $1.30/share. - Increase in inventory is in anticipation on strong Dec Q for desktop - Expect strong unit and revenue growth in Dec Q - IDC is forecasting 22% sequential unit growth in Dec Q for PC business - 40% unit shipments were at 2.1 Gig level - 45% unit shipments were at > 2.5 Gig level - 15% unit shipments were at below 2 Gig level - Not a strong participant in the sub-$1000 market - North America accounted for 47% of sales - Europe was strong in Sep Q - Historically, March Q is also strong - Head Count: 5918 full-time employees about about 7700 total Interesting Analyst Comments/Observations: - SEG and IBM are starting to come down in 2Gig-6Gig range. Will there be price wars? - How does Sony compete with DLT? - If DLT was a separate company given a conservative P/E of 30, it would have a market cap greater than QNTM's total current market cap.