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

To: Thomas George Warner who wrote (7503)	11/12/1997 3:25:00 PM
From: Flamethrower	Read Replies (2) \| Respond to of 11057

<<and reap the benefits from those willy nillies that shouldn't have invested in the first place.>> I would rather be a willy nilliy with some cash left in my account than some intestinally stuffed guy with an empty wallet and account! ............Flamethrower

To: Thomas George Warner who wrote (7503)	11/12/1997 3:26:00 PM
From: Augustus Gloop	Respond to of 11057

Agreed....which is why I sit tight and dollar cost average.

To: Thomas George Warner who wrote (7503)	11/12/1997 7:05:00 PM
From: Pierre-X	Read Replies (5) \| Respond to of 11057

Re: Informed Debate--presentation of bearish arguments. Hello TGW (and any others) I'd like to debate WDC's current situation with you. I believe a healthy debate requires critical, informed participants. You seem to be bullish on WDC; I am bearish in the short term. The purpose of the discussion is for one of us to convince the other. >buy more. Look at the fundamentals folks. 94M shares (100% of >capitalization) , no debt, still highly rated by standards and poors >and valueline, an excellent product etc. Read the latest reports These are all positives, no arguments from me. However let me list a few points specifically against WDC in the SHORT TERM: 1. WDC is behind the technology curve. By their own admission they were last to transition to MR products. This worked to their advantage last fiscal year but in the last CC WDC said they plan to accelerate transition to MR due to the pricing pressures, and possibly take a related one-time loss in the current quarter. 2. WDC is the most exposed in the low end where the price wars are stiffest, and conversely is weak in the corporate/enterprise segment, having only begun selling in that segment this calendar year. SEG, IBM, and QNTM will almost certainly fight vigorously to retain their market share against intrusion by WDC in the face of collapse at the low end of the market. They know that WDC is hurting the most and, by keeping WDC out of the higher margin high end where pricing pressures have not yet materialized, they may be able to cripple the company. THIS IS NOT LIKELY TO HAPPEN, but as reasonable investors we should evaluate all possibility. 3. WDC has admitted to yield problems in their TFI drive production, particularly in the 1.7M/P products, which, in the preannouncement CC, WDC said they plan to ditch (which means APM is toast! Unfortunately I didnt understand this early enough to exit APM quickly, which has cost me heavily.) Now here are some points which I submit for your rebuttal against the HDD sector as a whole: 1. All producers have been increasing capacity. WDC indicates their own cap ex and expansion in the latest 10Q. Pricing pressures in 1Q98 were attributed to competition from SEG, subsequent to which WDC and SEG planned to voluntarily cut back on production growth. Can you say OVERCAPACITY. 2. New entry: Into that state of bliss, Fujitsu aggressively attacked, resulting in the recent preannouncement. Samsung has also joined the HDD party with a $200mm facility and stated plans to become the #3 HDD maker (!) All together now: OVERCAPACITY. <g> 3. All major OEM customers of HDDs are moving to BTO/JIT production models which puts a bigger inventory management onus on HDD co's. WDC dedicates a rather large part of the recent 10K and 10Q to this. That said, I'm long WDC/APM and swiftly (maximum warp) approaching six digit losses. I need you to convince me that some of this is wrong and that I should continue to accumulate. Pierre-X