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

To: Pierre-X who wrote (1843)	12/17/1997 1:14:00 PM
From: LK2	Read Replies (2) \| Respond to of 9256

A really nice posting on WDC (and the disk drive industry). This guy, Pierre-X, is up there with Lawrence Kam (the greater), T Bowl, and the other leaders: >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Message 2986108 Subject: Western Digital To: Thomas Haegin (8241 ) From: Pierre-X Wednesday, Dec 17 1997 4:24AM EST Reply # of 8256 Very cool notes on your chat with M. Blair. This is what all investors should do -- get to know the company mouthpiece and never hestitate to call 'em up and grill 'em -- that's why they're there! >>>>>>>>>>>>> weak spot in Asia that they can currently identify is Japan ... Other Asian countries are only marginal markets for WDC products at the moment. <<<<<<<<<<< Blair is putting a positive spin on the situation, but I believe current circumstances are rather grim. Depending on who you talk to, the U.S. is between 30 and 50 percent of the world market for PCs. A large portion of the non U.S. PC demand GROWTH -- repeat GROWTH -- was to have come from Asia. When one of your major potential markets suddenly gets choked off .... As I understood, they also do not produce the read-heads Heads come from: * Read-Rite (MR + TFI) * Applied Magnetics (MR +TFI) * TDK/SAE (MR + TFI) * IBM (MR) I wish I had percentage breakout for these -- anyone? >>>>>>>>>>>>>>. Blair indicated that he sees WDC rather benefitting from recent currency turmoils in SGP and Malaise-ia <g> because it lowers their labour/manufacturing costs <<<<<<<<<<<<<< Another positive spin. Actually, nearly EVERYBODY has most of their production capacity in currency-advantaged geo-regions. So WDC derives no special benefit, like Blair makes it sound. >>>>>>>>>>>>>> They first anticipated to ship close to 7.5mio this qtr, but have scaled this back to 6+mio units. <<<<<<<<<<<<<< I see this comment as a HUGE warning sign. Very very scary. With prices declining as fast as they are, I would expect to see a unit demand SURGE. Instead we are seeing excess supply coupled with lagging demand! What a nightmare >>>>>>>>>>>>>>>> "if necessary, we have significant upside left in capacity" <<<<<<<<<<<<<<<<< Well, duh. <g> So these 18% are dumping right now and ruining the rest of the market? Not precisely. Because of what appears to be low unit-price-elasticity in HDDs, a small amount of excess supply can have a large effect in price. Unit-price-elasticity is defined as the change in quantity of demand for a given change in price. An inelastic good exhibits relatively little increase in demand as a result of falling prices. You can't really put the onus on any particular company or set of companies for what some people are calling "dumping" -- it just so happened that nearly every DD maker ramped too quickly in anticipation of rapid demand growth, causing an overcapacity situation. I don't think TBowl and M. Yiu actually reside overseas. Not sure, I only know of them through SI and email. Mister Bowl continually amazes me with the depth and detail of his research. Regarding Gates' comments about PC demand, IN MY OPINION, DVD is no killer app. It will not drive a generation of PC sales growth. Feel free to disagree. Instead, I think cheap, high-performance 3D chips may actually take the role of killer app in the short term, such as the upcoming 740 from Intel. PC games are approaching console games in graphics and gameplay quality, and many households may elect to add a $100 board to a PC instead of purchasing a $200 console game-box. Just a possibility. PX <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<