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

To: jelrod3 who wrote (4205)	11/20/1997 4:44:00 PM
From: Greg Cervelli	Read Replies (6) \| Respond to of 7841

Alright I can't wait until tonight There will not be a press release tonight from the company as far as I know. Rather the news is based on my convo with the CFO today 1) Revenue will be significantly lower for next Q vs year ago Q. Rev will be lower vs last Q this year. 2) Restructuring charge for next Q will be more than 100 mil and will involve plant operations. Right now they are not at full capacity and do not foresee being at full capacity in the near future. this is due mainly to high inventories. 3) Cash and short term investments decreased by 25% vs year ago Q. This is due to Quinta purchase, Litigation, and Accounts payable. 4) 63 mil of losses were recorded last Q for Foreign currency hedging. There is another 100 mil that will hit the books next Q not as a charge but under COGS. 5)The company is not experiencing any problems or delays in implementing new software for their operations. They are switching to Oracle software running on Sun stations and servers. 6)They will not see a product and therefore revenue from Quinta until 4th Q '99. (1.5 yrs from now) 7)Their investment in Sandisk decreased from 25% to 22% because they did not exercise options to buy during sndk's second offering. Their original intention was to buy the entire company. That is no longer the case 8)They will derive 250 mil annually in rev from software based on last Q's 63 mil 9)When asked what was more important, Market share or Margins, the answer was market share. He said they will continue to cut prices and will not lose any more market share. 10)Regarding the emergence of the sub $1000 pc market, he views it as good for 2 resons: 1) because of their vertical integration strategy which enables them to reduce the cost of manufactoring and 2) eventually those machines will be linked to servers which need high end drives or they will need to be upgraded to hold more info. 11)The demand for desktop dd is good, however right now supply is better. Demand for high end dd was projected to be between 25-30%. Instead it is negative. The will ship less drives this Q then they did year ago Q. 12) They had planned to have a wholely owned subsid that was a software company called seagate software. But now they may begin incorporting that software onto the dd, adding extra value to the drive. 13) There investment in Dragon Systems does not fit into their long term stragegy. Rather, the saw a good technology and invested in it. 14) Not much will change in the short term because the technology for fitting more info on a disk is increasing faster than the need for the increased capacity. Longer term he thinks this will come into check. 15) He likened the current situation to one that occured in '91. However he did say that there is more competition today than 6 years ago. If you have any questions let me know because I'm sure I left some stuff out. Remember everything I wrote has been put into my words. As much as I would have liked to record the convo so I could provide quotes I didn't. I have not made any assumptions based on what he said I simply restated it as best I could remember and as best as I could read my writing from taking notes. *Alright, I saved the worst, but best info, for last: This Q will be "marginally profitable" . What the hell does that mean? According to the CFO it means less than where the analysts are now. Zacks has them at .08. He said to expect between .01-.05. Very scarey. I will sell in the morning Greg