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Technology Stocks : Applied Magnetics Corp -- Ignore unavailable to you. Want to Upgrade?

To: Brian Lempel who wrote (10865)	12/8/1997 9:19:00 PM
From: Gus	Read Replies (2) \| Respond to of 12298

Brian, Please add these ones: Do you agree with TrendFocus's projection that there could be a potential glut of MR heads next year primarily due to increased production by SEG (365+ M heads/year), IBM (130+ M heads/year), TDK (120-160 M heads/year) and Yamaha (100-150 M heads/year) as well as the smaller players like Alps, Sony, Headway, etc? Did you increase your authorized shares so you can buy or merge with Headway Technologies to get some capacity and its field-proven dual stripe MR head design? Background. Headway Tech. is Hewlett Packard's former technology partner that was orphaned when HWP exited the DD biz in 1996. SEG, IBM and WDC have already licensed this design. IBM has demonstrated that by scaling the dimensions of off-the-shelf components, it can extend conventional or anistropic MR dual stripe heads all the way up to 5.0 Gbits/in2 (Speriouso was a player in the last few IBM MR milestones including this one). By contrast, IBM and Toshiba's GMR heads start at 3.0 Gbits/in2 with nowhere the yields of MR. The kicker is that SEG has been using these DSMR heads in their Cheetah drives for two generations now because DSMR heads provide certain performance advantages in speed applications. Note that both IBM and SEG are trying to change the rules of the game by bring the 7200 rpm drives to the high-volume desktop and Headway's field-proven DSMR heads could quite possibly be a key tech to have in the next two years as the industry moves into the 3.0-5.0 Gbits/in2 range. Under their licensing agreement, SEG is obligated to buy 30% of its DSMR requirements from Headway with the option to self-manufacture (and pay royalties) up to 70%. The last available figures show that SEG manufactured 1.8 M DSMR heads in the June quarter with a more aggressive ramp in the next few quarters so that means they bought at least 770,000 DSMR heads from Headway in the June quarter with an aggresive ramp to factor in. This dovetails with one projection that Headway is in the process of expanding capacity - using about $19 million of purchase advances from WDC, SEG and IBM - to something like 2.0 million heads/quarter, or 8 million heads/year by next year. Look at the capacity of the big five (including RDRT) and you know that even with its field-proven proprietary tech, Headway and even APM simply don't have the economies of scale to compete for long, or even survive a glut. If the answer is anything other than a no, please email me before you post it, okay, buddy? Regards, Gus