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

To: Stitch who wrote (2421)	2/2/1998 1:40:00 AM
From: Mark Oliver	Respond to of 9256

Stitch, there are some supporting note on Maxtor in Lehman Bros recent review on WDC dated 1/30. They have noted Maxtor as a big threat to WDC. They seem to think Maxtor has captured most of WDC's lost OEM business and it will be up to WDC to win it back. Here are some quotes: Competitive Update - Maxtor Gaining Share While Maxtor has yet to report its quarterly results, we expect that it will post its first profitable quarter after > $500 million in losses over the last several years. The company has been focusing on returning to financial health and has - over the past two quarters - successfully delivered volume, time-to-market, competitive desktop drive offerings, enabling the company to gain market share in a difficult industry environment. We expect the company will ship over 3.4 MM units in its December quarter and that revenues will increase sequentially in excess of 30%. Maxtor has made significant inroads into several strategic OEM accounts including Compaq, IBM and Dell. We believe these 3 accounts in total represent approx. 50% of Maxtor's business with total OEM representing 70% of sales. We believe that these share gains were achieved largely at the expense of WD. Maxtor has successfully achieved key OEM penetration through its leading MR desktop products. Like Quantum, the company transitioned early to MR and has been able to achieve better pricing than many of its peers in what has been a difficult industry environment. Maxtor is now in its 3rd generation of MR and ships 100% MR products. Going forward, it remains to be seen if Maxtor can continue to execute and whether it can fund further expansion plans. The company is nearing its capacity limits at its Singapore plant (approx. 4MM drives/quarter) and plans to add a new plant in 98/99 with capacity for an additional 5MM drives/quarter. If successful at both these initiatives, WD may experience increased difficulty reclaiming lost market share at these strategic accounts. Much of this tracks with your posting and even adds greater strength to the Maxtor threat. Adds some interest to think they may not get funding to expand. Would make sense for them to acquire Samsung in some sort of trade. I noted earlier that RDRT has approx 73% of rev coming from WDC and Maxtor. Interesting to see that as market share shifts between RDRT's customers, they might do better than expected? Where's IBM in all this? I thought they must be hurting everyone with head and drive competition, but I rarely read anything about them besides technical wins. Regards, Mark