Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: stock bull who wrote (4195)	11/20/1997 2:27:00 PM
From: still learning	Respond to of 7841

I would argue that the rise is also partially due to QNTM strength leading the segment higher -- a belief that things can't be horrid if at least one player is doing OK (see upgrades from 2 firms -- I think Bear Stearns and Goldman today) Even tho QNTM (up 3+ points) is due to tape strength, it may be helping DD sector.

To: stock bull who wrote (4195)	11/20/1997 3:37:00 PM
From: MKL	Respond to of 7841

Margins is definitely the main issue at this time. Currently only the desktop DD segment is growing with the high end segment having a negative growth rate. AT WDC's conference call couple weeks ago, WDC mentioned that their low end desktop have low teen gross margins (due to Fujitsu dumping DD). Seagate is probably experiencing the same GM which lead to their announcement. With high end DD market shrinking and other DD companies gaining share, Seagate is having problems pushing their high end drives. As a result ASP is reducing, which leads to lower GM (lowered than historical average). Cost is at issue with Seagate because plants are not running at full capacity and trouble converting to MR. As regard to Seagate having excellent products. I might disagree. At the end of last quarter, Seagate FG inventory was primary performance desktops and server (high end) drives. Why? Because their performance drives are not competitive and server DD are losing mareket share lost. The only reason FGI wasn't higher because Seagate dumped low end desktop DDs (as a result low GM). GM will continue to be low as long as asian companies (Fujitsu, Hitachi) are willing to buy market share. I see this trend continuing through mid 1998. Then we see how Seagate performs. Happy Investing