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Technology Stocks : QUANTUM -- Ignore unavailable to you. Want to Upgrade?

To: patroller who wrote (7590)	3/23/1998 10:05:00 AM
From: Sam	Read Replies (1) \| Respond to of 9124

Patroller, Well, Z replied pretty well--QNTM has been talking about second sourcing DLT for awhile. We don't hear from the library resellers that growth has slowed, at least not yet. If I recall correctly, though, it was companies like CPQ, HWP and DEC who were the largest DLT resellers last year, not the library makers. Whether their sales have slowed or not is not publicly known, at least--it is surely too small in revenue terms for them to break out. And while I don't recall any public announcements about second sourcing, I'm not sure that we would hear that sort of thing. It could well be that while 7000 supply was constrained, people were double ordering, leading QNTM to believe that there was bigger demand than there was, leading them to overorder the boards that JBIL makes, and now they have to deal with the inventory. Don't forget, they were back in Aug-Sept projecting 100% Y-Y growth until next March, then in Dec., they scaled that back to matching server growth. Even if DLT is only growing somewhere between 20-40% Y-Y, it is still doing pretty well. I would certainly be happy if it is closer to the higher of that range, and wouldn't be unhappy with the lower if margins remain robust. But the stock price right now, I think, reflects this broad uncertainty, and not even the 20% growth. I wish I felt I could give your question an intelligent answer. It is clear that this quarter and next will be messy. It will be interesting to see how QNTM fares--for example, if their strategy of outsourcing their manufacturing to MKE will cut their fixed costs enough to limit their drive losses. They took a big writeoff last quarter to cover inventory losses. Does that mean that this quarter will be better in that regard? Lots of queries. sam