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

To: Z Analyzer who wrote (5763)	11/27/1997 11:12:00 AM
From: Rational	Respond to of 9124

Z, I thought over the issue of spin-off more carefully. Strategically, it is not a good idea: * Leaving the DD Division independent can wipe it out due to fierce dumping by SEG. Observe that SEG price was up yesterday while QNTM was down because the WS seems to believe that SEG will survive among all DD makers. The WS sellers of QNTM stock are stupid, IMHO, by assuming that QNTM is a pure DD player. * I therefore recommended in my earlier post that QNTM sell the DD Division to, say, SEG for a hefty profit. But, that will be myopic because eventually the DD business will be limited to a few strong players and be profitable. WDC will continue to fall, IMO, until some of the stronger players buys them out. QNTM may like to buy WDC and operate the DD business to compete with SEG. I feel something like this will eventually happen. * QNTM's DD division is very strong, competitive and produces better DDs than the rest of the market. Selling this will be unwise because this division will eventually be a winner after SEG runs out of cash for dumping. In this sense, keeping DLT within the existing QNTM structure makes SEG run out of steam and WDC get ruined. * I think QNTM's business model is ideal for an unambiguous leadership in this area. Sankar

To: Z Analyzer who wrote (5763)	11/28/1997 12:33:00 AM
From: Rob S.	Read Replies (2) \| Respond to of 9124

I don't think Quantum should spin off DLT or high-end DDs or any other segment at this time. In fact, they are in a strategic position to move forward to achieve superior long-term growth. One of the problems with companies in the DD business, and the basic reason why they typically do not attract "normal" P/Es compared to other high-tech growth companies, is that they have been primarily dependent on single product categories - when the DD business gets into a temporary oversupply or shift in technology cycle, similar to the one we are in now, profits nosedive. The DLT looks great for the next couple of years or more but who will bet that it will not be superceded within three or four years by some other technology, maybe NFH and/or another tape format? Quantum needs to be diversified acrosss a few different basic storage product areas and perhaps also try to move "upstream" toward more systems level products. I tend to keep my investment focus short-term but would argue that Quantum management should have a longer-term focus. I don't understand their business nearly as well as they do, but that's the way it seems to me. The needs for storage devices of many types will continue to grow at a very healthy pace and Quantum is in a position to move further ahead of everyone else in the business by leveraging their strengths and keeping one step ahead in all areas. Longer term thinking will bring the greatest value to Quantum shareholders.