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

To: Gus who wrote (1559)	11/14/1997 9:51:00 PM
From: Pierre-X	Read Replies (2) \| Respond to of 9256

Re: Nov 13, 97 WDC Shareholder's Meeting __Here are my full notes on the meeting yesterday. __The text of the presentation is already available on the WDC website, and the precise link was posted by William Leiby in WDC #7577. __My notes cover Haggerty's responses to various questions from shareholders, including mine: ú limited visibility in competitor's pricing and capacity expansion plans ú Currently 11 MR head producers vs 5 TFI ú Hiring freeze on -nonproduction- personnel ú But Micropolis shutdown is opportunity to hire skilled people in a very tight labor market ú Alleged that industry was broadly cutting back on production. [I questioned him about the need for ALL players to play ball for this to be effective, but his answers were noncomittal.] ú Admitted that price drops were probably result of overproduction ú WDC has historically been able to maintain a $10/unit pricing premium due to factors like reputation. ú Noncommital about possibility to leapfrog quickly to GMR ú WDC is totally committed to the HDD business which is their one and only focus. After the main session I managed to speak a bit with Kathy Braun, Pres. and CEO of the Personal Storage division: ú WDC makes ~30% of their own platters (500 employees?) ú RDRT MR heads looking very good [I assume she meant quality and yield] ú APM fumbled badly, they are in transition to MR but she confirmed that their R&D spending is low ú WDC is in the process of qualifying head -stackers- since heads are not constrained but head stack assemblies (HSAs) are in short supply ú Confirmed that the yield problems on the 1.7m/p drives were APM products, and that they are moving away from it ASAP ú Fujitsu is the major aggressor, and the near term depends on their actions ú Confirmed that hi-cap drives (e.g. 9GB) were yielding very well ú She expressed surprise at the oversupply in the current quarter, as the Dec quarter has historically ALWAYS been tight ú Alleged that NEC is cutting back HDD production ú Hinted at some kind of drive interface revolution in the works Pierre-X

To: Gus who wrote (1559)	11/15/1997 1:39:00 AM
From: Frodo Baxter	Read Replies (4) \| Respond to of 9256

Again, you are falling into the trap of substituting most-favorable hindsight scenario for factual reality. This is otherwise known as wishing. - These hedges were almost definitely constructed to hedge against RISING SE Asian currencies, not (FREE)FALLING currencies. If I thought SEG was going to be a $20 stock in three months, I most definitely would not enter into a 3-month contract to buy it at $25. - You're assuming linearity in the foreign cash flow-currency rate relationship. This cannot be assumed. While the relationship may approach linearity for small ranges, SEG was wrong in both magnitude and direction. - There's only two ways of looking at this. You can, as I do, call it a very bad (but understandable, given the circumstances) bet, write it off, and move on. - Alternatively, you can persist in the fiction that this is a hedge in which the only downside was that SEG conservatively gave up an undeserved windfall. If so, then you should treat the hedging losses as operating expenses and not as one-time charges. How do SEG's margins look in that context? Also, you should wonder why SEG is no longer playing the futures market. Volatility? Silly me, I thought that was why people hedged in the first place.