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

To: Frodo Baxter who wrote (5469)	11/21/1997 9:27:00 AM
From: Harley Morgan	Respond to of 9124

Hello Everyone on the Quantum Thread. I've been lurking for sometime and finally joined the thread. Like many of you I was long on the DD sector this summer after Seagate lead the sector down and booked some nice profits thru late summer but decided the stock movement to the downside was occuring from the technical charts. I've returned to Quantum at 26 1/2 but am still concerned regarding unforseen news. I've included the following post that I found from the Denver Post on 11/19/97 regarding the MKE-Quantum joint venture. I do not know the terms of the MKE-Quantum spinoff agreement and would like the comments of anyone who does regarding this "unprofitable line from Digital" cited in this article. Any idea what magnitude of writeoff this might induce? __________________________________________________________________ Quantum slashes workforce By Leyla Kokmen Denver Post Business Writer Nov. 19 - Quantum Corp.'s Louisville spinoff has slashed almost 500 jobs - more than three-quarters of its workforce - in an effort to restructure and stem substantial, chronic losses. The MKE-Quantum Components plant, a joint operation between Quantum, the Milpitas, Calif.-based maker of computer disk drives and storage drives, and Matsushita-Kotobuki Electronics Industries Ltd. of Japan, will retain its Louisville operation but refocus it solely on research and development, said site manger Tim Stucchi. Previously the plant had also manufactured recording heads for disk drives. Manufacturing lines at the plant were shut down as of Tuesday, and all of the manufacturing jobs were eliminated. Employees at the plant were informed Tuesday that 439 full-time and 55 temporary employees had been laid off. About 130 employees will remain in Louisville for research and development of new recording technologies, said Holly Campbell, spokeswoman for Quantum. To reduce production costs, MKE-Quantum's manufacturing will shift to existing facilities in Shrewsbury, Mass., and Batam, Indonesia. Some employees will be offered jobs at the other sites, but no new jobs will be created at either one, Campbell said. After years of unprofitability, the company decided to streamline. It declined to disclose the amount of the losses. "We've suffered with that for the last several quarters," Stucchi said. "We've been talking about what kind of actions we needed to take to get the business headed in a profitable direction.'' Quantum acquired the business in 1994 when it bought Digital Equipment Corp.'s storage unit business. It has not been profitable since, Stucchi said. Quantum and MKE spun the joint operation off earlier this year. About 70 laid-off employees will have a chance to relocate to Shrewsbury, and about 15 will be able to relocate to Batam, Campbell said. About 75 employees may be able to relocate to Colorado Springs, where Quantum has its growing DLT tape storage business, she added. But those possibilities - along with the job search services MKE-Quantum will provide starting today - were not enough to eradicate the trauma of layoffs the week before Thanksgiving. After Tuesday's announcement, the reaction among employees was "some level of shock, but generally just disappointment," Stucchi said. Employees will remain on the payroll until Jan. 31, Campbell said, and will receive severance benefits based on their length of service. There is, however, a silver lining. Though he acknowledged the significance of the layoffs for those affected, Clif Harald, vice president of business services for the Boulder Chamber of Commerce, said that because Boulder County's unemployment rate hovers around 3 percent, there are many opportunities - particularly among high-tech businesses. "Every employer in Boulder County, especially high-tech employers, have been struggling to find employees," Harald said. "There are literally hundreds if not thousands of jobs in Boulder County that are going unfilled. Most of those people who are leaving Quantum will be able to find other employment, if not in Boulder County than at least in the metro area." Karon Smith, director of workforce planning for Louisville's Storage Technology Corp., said she has already started posting job opportunities at the MKE-Quantum plant. In the Louisville area, StorageTek now has about 300 openings, she said, some of which could be good for those laid off from MKE-Quantum. As technology companies in the Denver area try to establish the region as a high-tech leader that can compete with both coasts and Texas, keeping high-tech talent in the area is essential, Smith said. "We need to build the infrastructure and keep the skills in the area," she said.

To: Frodo Baxter who wrote (5469)	11/22/1997 2:03:00 AM
From: Alan Hume	Read Replies (1) \| Respond to of 9124

Hi Lawrence "Why should QNTM sell off the DD business when it can spin it off to its long-suffering shareholders." Firstly, although QNTM's desk top DD biz may be in fairly good shape now compared to its competitors, the sector has always been renown for short cycle times, high R&D costs, fierce competition and razor thin margins. In a word, low ROI. I don't see that situation fundamentally changing. Secondly, a divestment rather than a split off would put a lot of cash at MB's disposal. He may want this for a further aquisition, or maybe for a complete take over of Terastore, or both. Remember MB is a very astute business man and has got QNTM where it is today through far sighted aquisitions. Precisely what Haggerty and Shugart seem to have neglected. Thirdly, it would seem to me to be most logical of MB to concentrate the companies capital in the areas promising the highest ROI. And I don't see that being DD which I see becoming an increasingly higher risk. Regards Alan