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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: Z Analyzer who wrote (1742)	12/11/1997 12:24:00 PM
From: Sam	Read Replies (4) \| Respond to of 9256

Z, The most interesting question in the CC to me was the last one, from Kim Alexis. SEG, WDC and QNTM are cutting production to bring supply and demand back into balance (note there was no mention of IBM that I can recall from Michael Brown on this score), she asked, but what about the Asian vendors? What if they ramp up to keep the supply out of balance? MB's answer was that they (the Asians) weren't making any money on drives either at these falling ASPs, so would be "rational" and will eventually either consolidate, leave the business, or cut production. But the real question behind Alexis's question--which I wish she would have asked--is what if they don't act "rationally", as MB suggests/hopes? After all, they clearly haven't done so with their massive chip over-production. What if their real goal is to drive the US producers out of business eventually (taking their famous "long" view), and it doesn't matter to them if takes 3, 4, 5 years? I'd like to see some discussion of this point, if anyone has any sage words. Sam

To: Z Analyzer who wrote (1742)	12/11/1997 1:14:00 PM
From: Gus	Read Replies (2) \| Respond to of 9256

Lehman's research note summary: NEW YORK, Dec 11 (Reuters) - Lehman Brothers said on Thursday it cut its rating on shares of Quantum Corp to neutral from buy based on continued weakness in the hard disk drive market and lower expectations for growth of its DLT business. -- "As expected, continued weakness in the hard disk drive environment has lead to revenue shortfall and margin erosion in the quarter," analyst Kimberly Alexy said in a research note. "Unexpectedly tape growth decelerated from 116 percent in the second quarter to an estimated 66 percent in the third quarter as a result of product transitions and a realignment of supply and demand." 116% year to year growth = about 21% Q to Q sequential growth 66% year to year growth = about 13% Q to Q sequential growth "realignment of supply and demand" = DLT 7000 ($7000-$8000 MSRP) was 30% of product mix in September quarter and significantly more than that this quarter (40-50%??). -- Alexy said she was lowering her growth expectations for tape as a result of concerns surrounding a weaker demand outlook for personal computer server growth in 1998. 30-40% CAGR in mid-to-high-end servers over the next few years per QNTM. Something to keep an eye on. Japan is 15% of the total global market and Rest of Asia is another 15%. Asia is the trickiest part of the PC demand equation because it was growing faster than the mean. Now nobody really knows what the demand will be going forward. -- We continue to believe that the hard disk drive environment will likely continue to deteriorate before improving and that margin and earnings pressure will persist for the group," she said. -- Cuts fiscal 1998 earnings estimate to $1.81 per share from $2.26 per share and lowered fiscal 1999 estimate to $2.50 per share from $3.45 per share. biz.yahoo.com