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

To: steve goldman who wrote (9028)	3/30/1998 8:59:00 AM
From: Sawtooth	Read Replies (2) \| Respond to of 11057

Slightly OT (but only a little); thought of it when Steve mentioned Dell. I very recently (last 2 weeks) purchased two top end Dell Dimensions and they are some lightning fast screamers, FWIW. When I was spec'ing them with the salesperson, I asked what brand of HD they used. Answer: Usually WDC or IBM; except for the top end large (8.4 GB) drives, they are Maxtors. While the Maxtors are super sonic in performance and I'm very well satisfied with them, I am curious if WD or IBM was unable to supply the big drive; or is there something else going on here? I notice in street catalogs that the Maxtors tend to be a little higher priced than the Seg's, Wdc's, and Ibm's; so it doesn't seem that lower price is likely to be the issue. The tech support person at Dell said people love the Maxtors. Is there a gap in product line at this level for IBM/WDC that they may be interested in addressing in some way by a combination? Just a thought.

To: steve goldman who wrote (9028)	3/30/1998 9:46:00 AM
From: Jeff Mills	Read Replies (1) \| Respond to of 11057

The situation in the sector today reminds me of the summer of 1996. If you go to the Quantum thread and begin to read posts from about July 15th '96 onward--you get kind of the same feeling as today. At that time, QNTM was around $7 and went to $43 1/4 14 months later. Patience is very important at these levels. Anyone with about a 1 year time horizon could double or even triple their investment. Cheers!

To: steve goldman who wrote (9028)	3/30/1998 4:18:00 PM
From: Jacky AY	Respond to of 11057

[rumors]... usually start from gossip and wishful thinking, sometimes on knowledge about activity relating to a company If the rumor is for real, why would somebody want to leak the news prior to the announcement. Is it just for fun? IMO, most rumors are baseless and are started from stock manipulators who intend to play the opposite side of the game. IBM would be a great suitor for WDC. IBM hasnt been hit by margins, etc., they have plenty of cash, they are working hard at getting into hard drive business especially lower end and they could buy wdc's revenues (which they are themselves contributing to) for afraction of reveneus. Some of your points are true. I just want to add that IBM exited the HD business a few years ago because they can't make money off it. But they keep their R&D money flowing and continue to license their technology. IMO, IBM has enough time to research the market and determine the sweet spot of the industry. Finally IBM determined to focus on high-end and portable drives. I don't see why IBM can't start their own fabs with their healthy cash reserve and advanced technology. Why would IBM pay 2x WDC's book value for a money losing business? IBM's lack of desktop HD line does not necessarily imply they will re-enter the market again by acquiring WDC or anyone else. This is the same argument as INTC exiting DRAM business because it is not wise to invest in all product lines. Besides, your valuation model simply doesn't make sense. You sound as if DELL is going to buy WDC for 2 bil since they purchase 2 bil worth of product in any single year. The point you missed is that hard-drive is a capital intensive industry. At this point of the cycle when supply exceeds demand, it actually costs more than 2 bil for WDC to get 2 bil of revenue. That is, if DELL pays 2 bil to acquire WDC, DELL may have to pay an additional 2+ bil/yr for the same WDC drives! BTW, DELL's business plan is probably not to make components at all. Why would DELL risk losing investor's confidence in putting money in a low margin business?