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

To: nonzeroa who wrote (2200)	1/12/1998 6:20:00 PM
From: Gottfried	Respond to of 9256

nonzeroa, I don't think we'll see 2 cents/MB by end of '98, because to increase density enough to get to that price point will take more time. And to get to 2 cents, the DD makers must increase areal density - they can't afford to ADD components (heads and disks). GM

To: nonzeroa who wrote (2200)	1/12/1998 7:18:00 PM
From: Pierre-X	Read Replies (4) \| Respond to of 9256

Re: Towel-Chucking To paraphrase Lincoln, the world will little note nor long remember the passing of JTS. The first tier shops are where any production-plan shifts will impact the industry. However, a salient feature of factories is that they don't go away for a long, long time. Unemployed factories, like unemployed workers, wait around in the wings for years, looking for things to do, and jump at any opportunity to bring home a little bacon. Micro theory would tell us that firms will operate to cover variable costs--which are painfully low in the case of HDDs. I'm not privy to the inside plans of what's happening at the major DD shops (and if I was, I wouldn't be tellin y'all! <g>) but let's do a short review: Shugart has spent his whole life as a DD man. Seagate, as current market leader--with as much franchise value as anybody could ever develop in a near-commodity biz like this--will survive the cycle. WD does nothing but HDDs. That focus is both their strength and weakness, amplifying profits in good times, but also roasting them hotter in bad. I'm tempted to say they've been around a long time and they'll continue forever--but that would be ignoring the realities of today. The truth is they are in deep doodoo. It's clear from the series of announcements over the past few months that this severe downturn has hit them somewhat unprepared--which could prove fatal. QNTM is an interesting study--they have this HIGHLY profitable tape business going on, and no doubt the idea of ditching the HDD side has come up in board brainstorming. However, they ARE the current #2 HDD player and we can understand a certain reluctance to capitulation and international humiliation. Maxtor, from all reports seems to be chugging along unfazed. Some significant new OEM spots, growing market share, and new capacity coming on line in time for the OS upgrade cycle all bode well for them. However as a sub of a foreign firm we have less visibility here ... TBowl and Gus are better equipped for a capsule summary. Samsung Storage, with it's parent caught in the throes of the most serious liquidity crisis in its history, seems like a candidate for the block (either auction or headsman <g>.) The same argument goes for Maxtor of course, but I haven't heard the same kind of positive news from Samsung as I have from the Hyundai/Maxtor contingent. It would be interesting to know which of these two have been hit harder by the DRAM downcycle. Hyundai as the DRAM world market leader has probably been hit hardest -- but that's a guess. IBM is a big mystery to me. There are so many things going on there, and I don't have good info on any of them ... clearly they have crashed the HDD party in a big way and their new products are drawing rave reviews. They could wind up as the new top tier vendor in 98, by trampling on the other three. HDD biz today is a big boy's game and IBM is the big kid on the block. IBM SSD is obviously not subject to the same liquidity constraints as the indys -- conversely IBM SSD could get axed for reasons that also don't apply to the indys . . . NEC has an agreement with IBM to make and private label some of their 3.5" designs. Back in June 97 they were planning to expand to a 5M unit per year output. I haven't heard anything about that since then. Those drives were probably earmarked for use in their captive NEC/Packard Bell PC business. I'd have to think with Japan in such a capital crunch auxiliary operations like these will be the first to get the axe. And last but not least Fujitsu with new plant announcements does not seem to have towel-chucking on their minds. So based on this fuzzy logic my top contenders for capitulation (or ongoing bare survival at a sad subsistence level like MLIS for the period leading up to their eventual towel-chucking) are: 1. Samsung (30% probability) 2. NEC (25%) 3. Western Digital (20%) 4. Quantum (20%) So whaddy'all think? PX