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

To: still learning who wrote (5248)	11/19/1997 1:58:00 PM
From: BuySide	Respond to of 9124

s l I agree that QNTM has very ethical management, and I am not suggenting that Todd Bakar has any inside information. Perhaps my use of the word "leaked" was inappropriate. The fact is, the analysts speak to management much more often than you or I, and therefore often have more timely information. Kim Alexy is a good analyst, but you would be wise to get you hands on some other reports, there are others just as good. Respectfully BuyS

To: still learning who wrote (5248)	11/19/1997 5:11:00 PM
From: Rob S.	Read Replies (2) \| Respond to of 9124

An associate had a conversation with H & Q's analyst who is supposedly here in Seattle on a visit. Apparently caution was raised by statemetns from Seagate, WDC and QNTM and from several computer OEMs at COMDEX. H & Q said they would likely issue a buy recommendation if Quantum moves down to the low-mid 20s or if the impact on earnings becomes better understood and does not effect the outlook as much as the caution in the market indicates. My sense of the situation is that we are now near the "inflection point" in sentiment and flow of bad news. We may still see downgrades or forecast revisions from other analysts that are stampeded by the price movement and other analysts revisions (baaah, baaah!), however, these will likely prove to be moves to protect their butts from having been bullish throughout the slide down. I wouldn't be surprised to see QNTM quickly move down to 25, but wouldn't expect it to stay there. The big "IF" is whether Quantum will issue an earnings warning or other news that is worse than currently expected. I think that if management came out with a statemetn about a modest downward adjustment that the stock would move up significantly. A lot of downward expectation is already built into the stock price - probably way too much. NOTE: WDC, Seagate, QNTM and other HD sector companies are now trading toward the lower end of their historical valuation range. They are still not at the very low end of historical valuations. Because earnings in this sector have been known to plummet rapidly, the stocks sometimes get discounted greatly to their current earnings. So while Seagate looks very cheap on current earnings, in a few months it may have a much higher P/E and other valuations even if the stock stays flat. That posibility for rapid movement in earnings due to radical swings in product pricing is why Quantum is trading at what might be perceived to be a rediculously low price. That price may prove to be either way oversold or in line with historical fluctuations and fairly valued. The argument that Quantum is more diversified and better positioned than either Seagate or WDC to ride out or even benefit from the storm are good ones but the cloud is over the market and visibility is still unclear. I think that Quantum is in an excellent position to gain market share with PC and networking equipment OEMs at the sake of WDC, Seagate and some others. Fujitsu is the potential spoiler in the market for low-mid range PC drives. However, Quantum has better specs and competitive pricing structure that should allow them to compete well against Fujitsu. If Fujitsu is dumping product in the US market, then I expect a trade action to be filed to stop it. Mostly, Fujitsu and Quantum are able to offer more competitive products than WDC or Seagate because they have designed, tooled, and ramped production of more efficient drive designs. WDC is about six to nine months behind the transition curve to MR heads and more efficient designs. Seagate is 3-6 months behind. Recent developments in capacity and performance for desktop drives have propelled them much closer to high-end system drive performance. It makes perfect sense now for Quantum to merge the two groups. The marketing of the product segments have some overlap in customers and channels but will probably retain a different focus. IMO, the near field flying head developments won't be a major factor until at least the second half of next year. During initial product design and production ramp phase the product line might well be negative to earnings. Sure would be nice to hear directly from the horses mouth what management thinks is shaping up.