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

To: tom pope who wrote (2194)	1/12/1998 11:20:00 AM
From: Don Earl	Read Replies (1) \| Respond to of 9256

Hi Tom, <Devaluation does work, on a short term basis.> Japan can export for less but they still have to pay more for labor, expenses and costs of materials on their foreign operations. The only areas they would gain any advantage would be on goods and raw materials produced completely inside the country. The yen was trading as low as 126-127 to the dollar last April without hurting earnings in the tech sector over the summer. It should come out about even. The cost of labor for the DDs has been cut in half in Maylasia and Korea since June because of devaluation. As close as I can figure labor for foreign operations was probably running around 35% of cost of sales before the devaluation. I think we're seeing the cost per MB reflected in that savings. At the same time the number of MB per drive is increasing. I don't think things are as far out of balance as some analysists would have us believe. I suspect we may be seeing some kitchen sink accounting this quarter where everyone that has padded the numbers for the last year are adjusting the books. I've noticed other companies like SEG that use Earnst & Young for their accountants take one time charges about every 5 quarters. It never ceases to amaze me how nice "generally accepted accounting principals" can make the numbers look (for awhile). Regards, Don