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

To: Howard Feinstein who wrote (7241)	11/7/1997 9:21:00 PM
From: Brian Lempel	Read Replies (2) \| Respond to of 11057

Howard, I don't think managment knew this one was coming. I listened in on the CC. It sounded like they were dazed and confused themselves about what was happening. I think they were caught off gaurd. Their models and reports indicated a 17% decline in capacity, yet higher demand, which should translate to steady, if not rising margins. Here are some things to note: Problem really only started 2 weeks ago when Fujitsu began dumping drives in the Retail sector. OEMs are largely unaffected, although prices have fallen more than usual. This is because there is a "grey zone" where OEM partners might pick up drives below the normal OEM cost... When asked if the Fujitsu dumping was because of supply or attemped gain of market share, he said, "I'll let the lawyers comment on this one, but it sure looks suspicious!" Federal investigation anyone? Also, they seemed optimistic (confident?) they could squeeze their suppliers. They seemed to think it was just part of their relationship...to be able to ask for price concessions in rough times. Bad for APM/RDRT. I also got a feeling of an oversupply of MR heads, which would likely explain the fast transition (if they can get the MR cheap). I bought some today at the open. I wasn't home to see the news before the bell! I had a limit in, and it was obviously triggered. But I am confident that WDC will recover. Pricing pressures will eventually be resolved, whether it takes a week or 2 quarters. WDC may very well languish at 20-30 for several months. However, once pricing and margins return to more normal levels, there will be huge growth in earnings which will be compounded by the higher sales that really aren't having much affect on the balance sheet right now. This will produce huge growth like that seen in the past year and a half, culminating in the runup to $54. I am willing to wait, and likely add more if it gets much lower. I think it very well could go lower. Other companies' reactions were not as bad as I expected. WDC is only the first to acknowledge the problem, and others will come on in the next few weeks. This may drove all DD companies down even further. I also humbly think that we may be in for a bear market. I have little experience when it comes to economic trends, but what I see isn't good. More and more companies, it seems, are coming out with warnings. Prices are being squeezed everywhere because of fierce competition. Earnings estimates are not being met by large cap companies now as well, including some Dow components. This leads me to think that at some point, stocks will come down to reflect lower earnings and lower estimates. Brian

To: Howard Feinstein who wrote (7241)	11/7/1997 9:26:00 PM
From: Chris Anderson	Read Replies (2) \| Respond to of 11057

Howard, I feel for you. Believe it or not, I still have a small profit in WDC but bought ASND in $50's!! I am going to write calls on much of my portfolio on Monday to protect current position. You might want to consider such a strategy. The market sucks right now, it will be a while before the techs resume their rise. Try and have a good weekend, my wife and I are both quite stressed right now, the market takes no prisoners and is harsh at times, but patience will reward us all...............someday ! :-)))) Chris