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 : Western Digital (WDC) -- Ignore unavailable to you. Want to Upgrade?

To: Jimmy Chan who wrote (7958)	12/3/1997 9:59:00 AM
From: Pierre-X	Read Replies (3) \| Respond to of 11057

I apologize for the sharp tone, as you correctly surmised, of my original post. First, let me say that I am a short term bear on the DD sector. The fundamentals are deteriorating -- or more correctly, the fundamentals HAVE deteriorated, massively, and we are seeing weekly fresh evidence of that. I always try to keep myself open to rational discussion from those who disagree. Too many make the common mistake of identifying themselves with their current viewpoints, and become defensive and closed to reasonable argument presenting evidence against their current viewpoint. I hope you are not one of these. Since you're obviously a HDD bull what I'm looking for from you is an elaboration on the sketchy bullish story that you painted for us. Here are your points as I understand them: 1. "Big Three" A depiction of an industry dominated by a few players I interpret to imply oligopolism in the HDD industry, with attendant advantages to the dominant players. If so, I disagree with an oligopolistic characterization. Although some conditions of oligopoly are present such as high barriers to entry, others are not. We have historically seen little or no collusion between DD makers in an attempt to exercise monopolistic pricing power and extract consumer surplus. This is partly due to the fact that concentration of demand (OEM's)nearly matches concentration of supply. And even the barriers to entry apparently are not very steep given the slew of new players in direct and indirectly competitive products. 2. Revenue/Earnings Growth Last time I checked these growth numbers they were rapidly approaching zero. 3. Doomed feeling about HD makers There's a good reason why the sector is out of favor. All the evidence indicates we are on the down leg of the DD cycle -- a somewhat overdue downcycle and therefore one which may be as gruesome and extended as the last upcycle. The myth that bottom fishers seem to believe in "what goes down must come up" is a myth. Stocks can and frequently do go to zero. I'm sure that you're all aware that equity holders are last in line to receive compensation in the case of bankruptcy and liquidation of assets. I look forward to your rebuttal. PX