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

To: Stitch who wrote (4332)	12/18/1997 2:36:00 AM
From: Gus	Read Replies (2) \| Respond to of 7841

Stitch, Re: Load/Unload technology. IBM Research (Almaden) has an online video of their cutting edge technology at... almaden.ibm.com Great site. It also provides a technology road map for the different components of a disk drive. Re: Lehman/BTO/CTO Lehman's site is at... lehman.com CRN (Computer Reseller News) has a series of articles about the channel... crn.com As you know, the major OEMs only account for 60-70% of a drive maker's business. 30-40% of the biz goes through the distribution channels with 5-6% going to the Retail outlets and 24-34% going to VARs, system integrators, resellers, smaller OEMs and smaller retail outlets. Surprisingly, the latter group still accounts for 20-25% of all PC sales in the USA. The Charles Haggerty interview in the CRN series is noteworthy and answers some of your questions re: BTO/CTO. Here's an excerpt. CRN: Will your distribution channel become more important then? Haggerty: It becomes more important because, no matter what happens, even though Compaq [for example] would do the technical qualification [and] would negotiate the contract and give you the forecast, the people you have to deal with on a day-to-day basis will be whoever that end distributor is. Compaq will do that with Western Digital. They'll do that with Quantum [Corp.]. They'll do that with Seagate [Technology Inc.]. So the guy down there at the distributor shop is the one who is really making the decision: Which drive am I going to use in the systems that I am building? Compaq is saying, look, here's a grocery store and here is three to pick from. You're down there at the distributor shop and you don't like me . . . you're not going to buy Western Digital stuff. crn.com Re: Factoids 1) It now looks like drive industry unit shipments will be up ~25% in 1997, year over year, but revenues are expected to be flat to down, reflecting the rapid erosion of ASPs, particularly during the second half of the year. 2) Reflecting the doughnut hole in PC demand being created by the turmoil in Asia, unit shipments are only expected to increase by ~17% next year (PC unit growth ~13.5%). Estimates for predicting the bottom of this down cycle varies from 1 quarter (believe it or not) to 4 quarters. TrendFocus thinks 6 months should just about wring out the excess supply, but it concedes that a lot depends on how the drive makers behave. I'm skeptical. Just the other day, SEG opened a new head manufacturing facility in the Philippines which is going to be run out of its Thailand offices and which is going to eventually account for about 18% of SEG's total head production capacity. nb-pacifica.com I believe that's Shugart doing his imitation of Al Pacino in Scarface: "You want a war, I'll give you a war." Seriously, my understanding is that SEG is still in the process of populating one of their 6 production facilities in Thailand -- a factory rated to produce 60 million heads a year -- and now they add this one. Shugart's up to something. 3) As you are aware of, Stitch, historically, the component suppliers have suffered more than the drive makers in a down cycle. There's an article by Dvorak on the QNTM board re: the disk drive industry and consolidation. I would add that heads and media - the historical bottlenecks -- are probably the most likely areas to see consolidation. We have already seen some movement in platters (Stormedia + Akashic) and given the way that the Japanese indies have coalesced around Toshiba's GMR design, we may yet see APM do something to catch up. (Headway? Das Devices? Headway and Das?) As usual, RDRT is probably content with their road map. My friends and I are convinced that the head player to watch is Crisman of APM which is in the process of doubling its authorized # of shares. Too big to be option-related. Can't be an impending stock split. The market is doing that to his stock for him. Crisman is the guy who had the chutzpah to try to use seriously inflated currency (early 97 APM stock) to buy the seriously deflated stock (early 97 RDRT stock) of a company more than twice its size. Even though it failed, that still has my vote for ballsy move of the year. I think we should expect to see more bold moves like that because the consensus is that things are going to get even more vicious before it gets better. Regards, Gus P.S. DAS Devices is this start up now being run by Bob Genesi, the former President of RDRT. It supposedly has a new manufacturing process that allows it to build thin film heads (MIG, TFI, MR) for 30-40% less than the competition. There are legitimate questions about the company's ability to turn Shyam Das' (a former DEC engineer) patents into practical reality. Smart moneybags behind this one, though.