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

To: Rational who wrote (6116)	12/5/1997 9:31:00 AM
From: Chuck Bleakney	Respond to of 9124

No, It simply means what it says... that QNTM shifted production of drives from a production line they owned and operated to the production line they had been using for years for their desktop offerings. A contractual agreement with MKE. Profit and loss are still dependant on a reasonable markup... Does anyone have a reasonable markup in this market??? I certainly helps to limit the exposure though since they don't have to flood the market with even more product to minimize the bleeding as a vertically integrated company would have to do. But the rest of the overhead is still there. There's no free lunch. They still have to compete but they have the ability to be a little more nimble about how its done... that should keep their profit margin on the high side of the average, and that certainly helps. Price erosion is the real problem, and it doesn't look like its going to go away any time soon, if ever... So the challenge is how to design and build these drives cheaper. That is not a problem you can solve overnight. It happens one generation at a time while everyone else is trying to do the same thing. Basically it's a buyers market... and it's going to remain that way until some of this production capacity eases. That can happen in several ways... by the choice of everyone in the business (not likely!) or by some of the players falling flat on their faces. The question is which players will falter... The smaller players are at the greatest risk. I think that the 2 new Korean players and WDC are in the highest risk seats... (personal opinion!!) Chuck Chuck

To: Rational who wrote (6116)	12/5/1997 9:40:00 AM
From: UpwardBound	Read Replies (3) \| Respond to of 9124

Sankar, No, no, Quantum has merely shifted the high-end business to follow the same manufacturing model as the desktop business. The desktop business has been profitable for many years with Quantum designing the products and then MKE doing the manufacturing. With the high-end restructuring, Quantum has gone to following a proven, highly successful model to ALL of it's disk drive products. MKE is a master at highly automated assembly and applying that to the more complex high end products results in excellent reliability. Disk drives are made at MKE on lines that can virtually run with the lights out since the robots do all the assembly. Seagate uses an army of manual assemblers with some automation. --UpwardBound