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

To: tom pope who wrote (1455)	11/9/1997 4:52:00 PM
From: LK2	Read Replies (1) \| Respond to of 9256

Very interesting article on PC sector (including disk drive sector) posted by Paul Reuben. Whether you agree with the views of Roxanne Googin (a technology analyst) or not, it's definitely worthwhile reading the article and trying to determine whether her views have any merit. If her views do have merit, even if there are errors in her views, it means the valuation of PC stocks (and their component suppliers) could experience a long-term decline---not just a short-term correction. -LK >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> techstocks.com Subject: QUANTUM \| Previous \| Next \| Respond \| To: Gottfried Mauersberger (4592 ) From: Paul Reuben Sunday, Nov 9 1997 11:45AM EST Reply #4618 of 4631 In case anyone hasn't seen this one: cbs.marketwatch.com. <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<< Western Digital won't be alone in its misery Analyst says PC industry is in 'first inning' of downturn Sat Nov 08 16:38:44 1997 Related Links Software Report Industry indexes Market Monitor StockWatch NEW YORK (CBS.MW) -- Western Digital Corp. shocked investors when it warned that earnings for the current quarter would come in about 60 percent below analysts' expectations. The Irvine, Calif.-based disk drive maker expects to net 20 to 30 cents a share for the quarter, well below Wall Street's consensus forecast of 84 cents. Western Digital, which cited pricing pressures and not reduced demand for its troubles, also warned that next quarter will also not meet analysts' projections. Independent analyst Roxanne Googin told CBS MarketWatch that the explosive sales growth of sub-$1,000 personal computers is behind Western Digital's problem, and will likely result in earnings shortfalls for a number of other PC players. "You haven't seen anything yet," Googin warned. Here are excerpts from the interview, led by reporter David Wilkerson: CBS.MW: What accounted for Western Digital's second-quarter shortfall? How much were they hurt when Seagate flooded the distribution channel, as Quantum pointed out when it released numbers? Googin: I think you're being too event-driven. The thing that's happening is the $1,000 PC. And the thing that's driving that is that you get 30 percent price performance increase in chips, and frankly 60 percent per year in disk drives, but there's no features being added to the PC. And if you think about it, there's no new Microsoft operating system, all of the new software developers are on the 'Net now. So what's happening really is that the PC does not have enough new innovations on it to support continued price performance in the components. So that's the secular problem that you're faced with, and the most direct evidence of it is the talk about the $1,000 PC, and how popular it's becoming. Other evidence would include price pressure all the way from Intel all the way on down. So what's happening in the drives is that tactically, you can get now more than 2.1 gigabytes per platter on one platter, but people don't want more than that. 2.1 is fine. And the drive guys always made money selling multi-platter drives, because people wanted more capacity than could be effectively delivered. That's no longer the case. For the first time in the history of the PC business, the feature growth is lagging price performance growth. So what you're seeing is that everybody is taking price cuts. So what you're seeing is Intel is having its analyst meeting today -- Intel hasn't made its quarter since the first quarter ... CBS.MW: Intel apparently had a fairly positive conference call. They seemed more or less upbeat about the fourth quarter -- Googin: Yeah, based on lowered expectations. I mean, fourth quarter (now) is nothing like what people were talking about in the beginning of the year. So what's happening is that fourth quarter is anemic at best, with terrible price declines, and it's affecting every vendor across the board. That's what's affecting Western Digital. And on top of that, they've been slow to migrate over to magneto-resistive [heads]. Their head supplier, Read-Rite, is not giving them good-quality yields on the high-end components that they need to make the transition. Quantum has bought the effective worldwide capacity (all of which is coming out of Japan at this point from TDK and Yamaha), and so on top of the secular decline, they have not executed as well as Quantum on the MR tranisition. Quantum is therefore gaining share. CBS.MW: Would you advise buying on WDC's weakness here? Googin: I think that the whole PC industry is in secular decline, similar to what the mini-computers went through last decade, that we're in the first inning. I think that you haven't seen anything yet. SoapBox airs the views of investors, executives, companies and just plain folks. E-mail your news or opinions and a one-sentence bio to CBS MarketWatch FRONT PAGE NEWS INDEX HEADLINES COLUMNS MARKET DATA GLOBAL MARKETS MARKET MONITOR CHARTING PORTFOLIOS MUTUAL FUNDS STOCKCHAT TRADING CENTER CBS MARKETWATCH RT CBS MARKETWATCH LIVE c 1997 MarketWatch.com, L.L.C. All rights reserved. Company Information. Disclaimer. The CBS "eye device" is a registered trademark of CBS Inc.

To: tom pope who wrote (1455)	11/9/1997 5:24:00 PM
From: LK2	Read Replies (1) \| Respond to of 9256

*OFF TOPIC*Tom, I'm disappointed in you. As a loyal (former?) shareholder of APM, you should be buying more shares of APM and helping to support the stock price. The only reason I was trying to short the stock was to try to get back some of the money I lost. It's not that I have anything against APM or Mr. Crisman. Mr. Crisman painted pretty pictures for the posters on the APM threads, and if official reports to the financial community (Wall Street, Salomon Bros.) didn't exactly match the pretty pictures painted by Mr. Crisman, there was probably a lack of communication somewhere. But as a loyal shareholder of APM, it's your duty to support the stock price while I'm trying to figure out a way to short the stock. Unfortunately, I don't think it's worthwhile paying around $24,500 for 10 APM April 45 puts. So I'm still looking for a way to get back some of my losses. Are you still long APM, QNTM, WDC and SEG? My impression is that you've dumped APM and WDC, but still hold positions in QNTM and SEG. Please read my previous post, about the Roxanne Googin interview. If what she says is accurate, the information is valuable. If what she says in inaccurate, the information is still valuable to help explain the disk drive sector volatility. What she says is not new in itself (about the $1000 PC), but the meaning of the $1000 PC and how it can change the economics of the entire PC sector is made more clear--at least to me. I think you're old enough to remember the mini-computer (DEC and Wang). May we all get back some of our losses. -Larry