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

To: Gus who wrote (10925)	12/10/1997 7:53:00 AM
From: T Bowl	Read Replies (4) \| Respond to of 12298

Gus - Nice work on the envelope. I'll try on a napkin(probably about what it's worth, but it'll be an interesting excercise). All of the WDC quotes are from the CCs that I listened to. <<Using a 60/40 TFI/MR mix (?), the 7.6 million heads break down as>> In the WDC CC of 07nov97 they said: "shooting for 1.5Mil Tuscon drives"{the 2.1GB RDRT/IBM MR head 3 platter} This is the only MR desktop pgm they are shipping. This makes an MR breakdown of roughly 1.5/7.3 = 20%. During that same CC they said: - " MR head utilization is accelerated by 1 1/2 Qs to 50% in MarQ and almost 75% in JunQ on the desktop" - "However, we are trying to take down the 1.7 and replace it with the 2.1" - "have accelerated the transition to MR (with the 2.1/platter pgm)" In the 17Nov97 CC they said: - "MR transition is in fact occurring harder and faster as we said in last CC" - "might have taken TFI products 1Q too long" Then, in the last PR - "further accelerate its transition to desktop and enterprise hard drives featuring MR" - "further reduce production of desktop hard drives from previously announced levels" It sounded to me like you were assuming across the bd pgm cutbacks. I do not think that is the case. IMO this all points to reduced production of the TFI pgms, NOT the MR pgms. You won't see ANY drop in the MR production at WDC IMO. At least that is my read. Everything they have said is "accelerated transition" and "moving to MR" and "replacing the 1.7 with the 2.1". However, this does not mean only APM suffers. WDC was a major customer for RDRT during the last few Qs when there was little or no MR production. WDC only became an MR customer of RDRT in Aug. The TFI pgms are both RDRT and APM supply. Very obvious if you read the RDRT PR that immediately followed the WDC announcement and then the APM PR a few days ago. It sounds like both companies were hit with reduction of orders. Nice work on the expected head rev drop due to reduced DD production. I did not realize that the TFI heads were so cheap... So, if you assume that the 1.2mil DD cutback is TFI, then the head makers will see 1.26.37 = ~$53mil in rev loses. <<$122.8 M x 30-35% = $36.8 to $43.0 million drop in APM revenues>> If you use those #s, then APM looks like it will get hurt worse than RDRT, however, I have NOTHING really to back that up. We're stretching here really. I guess in the end my question is does anyone else get the read that there are MR DD cutbacks at WDC? I'll try WDC today and ask. todd