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

To: Pierre-X who wrote (2206)	1/12/1998 7:39:00 PM
From: Yogi - Paul	Read Replies (1) \| Respond to of 9256

Thread, APM announced results--loss of $1.31 biz.yahoo.com irthrifty

To: Pierre-X who wrote (2206)	1/12/1998 9:21:00 PM
From: Z Analyzer	Read Replies (1) \| Respond to of 9256

<<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?>> How about zero for Quantum and WDC. That would be like GM getting out of the car business in difficult times. I think we have to hope for Samsung to pull out and Maxtor's creditors to pulll the plug on the China expansion. But our best hope is probably restraint by the big four while low cost PCs help the industry grow into its capacity.

To: Pierre-X who wrote (2206)	1/13/1998 10:31:00 AM
From: Sam	Read Replies (2) \| Respond to of 9256

"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." A few years ago, Maxtor seemed to be "chugging along" as well (while they were independent). They went under because they couldn't make any transitions. That is the thing about this business. It isn't that hard if you some insight and access to capital to hit one cycle. The problems come in when you try to make the transitions. If it isn't timed right, you get clobbered. Every company in this business--and I am included here not just vendors, but also component suppliers--have gotten hit at one time or another by this sandtrap. Frequently, the sandtrap turns out to be a tarpit, and the company can't make it out. The current Maxtor appears to have hit this particular cycle nicely (from their perspective, anyway); indeed, my guess is that their capacity expansion + Fujitsu's + IBM's new aggressiveness were the wild cards that no one saw coming, and combined with the transition to BTO and the influx of entrants on the high end more quickly than SEG prepared for, were the things which tilted the supply/demand balance into oversupply. As long as SEG, QNTM, and WDC had their primary and secondary niches fairly well defined and could forecast based on their market dominance, things were going swimmingly well. But add a few million drives per quarter into the balance along with the boxmakers reducing inventory, and you get a mess in a hurry. I too think that there is a chance that QNTM may get out of the DD business, or maybe that is wishful thinking. One fantasy: they sell the DD bizz to MKE for $3 billion (at a low low low PSR of .6, accounting for the risks in the business), and use some of the cash to buy Terastor, thus focussing on the tape business and whatever comes out of Terastor's [allegedly] revolutionary technology. Leaves them with a lot of cash to stay top dog in the at least currently more robust tape business (here is hoping that guidance in their last CC was exceptionally conservative, and not realistic regarding DLT growth), and able to take advantage of whatever bargains come along in the SEA debacle. Thoughts? Sam

To: Pierre-X who wrote (2206)	1/13/1998 6:54:00 PM
From: nonzeroa	Read Replies (2) \| Respond to of 9256

Towel-chucking continued... Awesome reponse Pierre. Do you think the probablities are additive? Obviously the point I'm trying to make is that brutally low pricing (.02/M by end '98) may lead to some self correcting of overcapacity. Everyone on this thread paints a pretty compelling picture that things will continue to get worse before they get better. I just worry that Wall Street generally looks at least 6-9 months out, and like Warren Buffett says, you pay a high price for a rosy forecast. What do you think of the stock price action in the sector today? Did you cover any APM? Off topic-Any good non-DD long ideas? I've got some extra put writing capacity and can't seem to find many compelling ideas.