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Technology Stocks : Western Digital (WDC) -- Ignore unavailable to you. Want to Upgrade?

To: John Wang who wrote (8923)	3/12/1998 4:39:00 PM
From: Sam	Respond to of 11057

Thanks, John. Great Post. s.

To: John Wang who wrote (8923)	3/12/1998 5:27:00 PM
From: David Harker	Read Replies (1) \| Respond to of 11057

John Wang wrote: >1) IBM closed their Rochester division. correction: IBM closed their Rochester DISK DRIVE operations. I'm typing this from IBM's "Rochester Division" which designs and manufactures AS/400's, manufactures RS/6000's, and writes lots of Software (my job). It is doing quite well - we collect our profit-based annual bonuses tomorrow, and they are sweet. >IBM is not as good in manufacturing execution and efficiency. Prove that statement, please. (ie, published cost numbers). Since all of IBM's disk production is now in asia (3 plants in 2 countries, I don't recall details) and WDC does the same thing (ie, designs disks in US, manufactures them in Asia) costs are probably similar. Re: WDC outsourcing parts VS. IBM making own -> IBM has GMR heads (Giant MR) which no one else makes - so why should IBM buy? IBM is the leader in the technology, as you correctly stated, which explains why it would be stupid to buy older tech. from others.

To: John Wang who wrote (8923)	3/12/1998 5:40:00 PM
From: steve goldman	Respond to of 11057

Great analysis John. One thing you missed was price....Anything can be a value depending on price. If IBM or SEG acquired WDc, and could get in around here somewhere, they would be grabbing 4 1/2 billion in revenues for around 2, 3 billion, who knows, but a discount to revenues, while many industries, especially tech trade at multiples to revenues.. If they can be efficient with such gained customers and technology, utilizing cost efficiencies they could clean up. An example...in any company, wdc for example, the first xx billion go to covering overhead, costs, sga, etc. its the last few that is all profit....so if IBM or SEG could digest WDC or some other player, not absorb the cost structure of wdc (cost efficiencies - cost savings) then they would be adding revenues toward the bottom line without adding the same proportion of cost. Again, there was an article monday about IBM's comment that they were lacking demand in certain price points. Who knows...but if I were IBM and I wanted to dominate the hard drive arena, I'd snag wdc...not qntm, too much desktop and tape,lots of overhead, Seg, very diverse and lots of overhead, but wdc , because of strenth of management, efficiencies of company (being a thin company). Also, its cheaper than going out and building plants etc. themselves. Everyone runs companies differently. Thats how I'd play it if I was IBM and wantedit. Stock looked great early AM. ran to 18 yet never touched it on strong volume, fell with market down 50 and then hover at 1/2 all day roughly, selling back in last 30 minutes or so....a good day.... They definately do not, ever, go straight up. Regards, Steve

To: John Wang who wrote (8923)	3/12/1998 6:30:00 PM
From: Jacky AY	Respond to of 11057

No. The rumor I heard was WDC trying to acquire IBM. WDC was said to offer $120/sh for IBM. WDC management was cited as interested in IBM's GMR program... They will pay $0.25/sh for IBM in cash and issue new shares to account for the full cost of acquisition. However, the rumor also said IBM officials were laughing at the offer. And they're subsequently considering forwarding copies of the offer to every IBM employee to share their joy... <vbg> Hope nobody takes the above seriously. I figure we need some stories to cheer up the shareholders...

To: John Wang who wrote (8923)	3/12/1998 9:34:00 PM
From: Stitch	Read Replies (1) \| Respond to of 11057

John, I was just getting ready to post a response when I read yours. Couldn't have said it better myself. I see some synergy another couple of ways as well: (1) W-D has superb OEM marketing and sales and IBM simply does not when it comes to drives. They have been so dependent and lazy from supplying internal needs they just don't know how to approach a Compaq, Dell, etc. IMO. W-D does this better then anyone. Another factor: W-D has a reasonable position in the desktop IMO even though lagging on MR heads. Add IBM's MR heads and ya got soup again. Best, Stitch