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To: Stitch who wrote (7766)	4/24/1998 12:46:00 PM
From: Sam	Read Replies (1) \| Respond to of 9124

Stitch, "Maxtor made money according to company press releases." Yeah, I see those claims. I still wonder how they accounted for the capital expenses that went into their expansion. I doubt their claims. I especially doubt whether they can keep it up, with the capital crunch that Hyundai and Korea Inc is going through. Just my meandering thoughts. Undoubtedly too cynical. After this is a commodity business that anyone can just fire up the furnace, tool up, and make money. Nothin' to it. Sam

To: Stitch who wrote (7766)	4/24/1998 3:50:00 PM
From: shane forbes	Read Replies (1) \| Respond to of 9124

Stitch: RE: Maxtor made money according to company press releases Wow! You're kidding??? Was this a recent quarterly thing. I thought these guys were bleeding money just a short while ago - I mean big-time hemorrhaging. If US companies hurt because of the stronger US currency then couldn't one make the case that the Asian companies had a huge (HUGE) advantage when their currencies dropped like rocks. All of a sudden they are hugely competitive with US companies. (True the US companies have Asian production sources as well but my feeling is that OVERALL it is much cheaper for the Asian companies when you factor in all the other little things involved in running businesses - wages etc in local currencies...) Saw from that link of yours that you have been in this industry for quite some time. A quick question: Can you point me to something that has how the big players rank in the various sub-sectors? Last time I checked Micropolis is gone, JTS is going going gone as well. Now this flies in the face of Asian companies being in a competitive advantage but my guess is one needs to be a certain size to get production efficiencies (and long term pricing power). Think these 2 are way too small to be effective. My guess is that the big guys in the market (US) have been through the wars in the early 90's and are reasonably savvy to not go under this time. Of course I could be totally wrong and one of them could fold. But I doubt it for the US companies at least. ---- The things that contributed to the collapsing prices were: - the sudden interest in the sub-1000 PCs (so in the same way that INTC could not all of a sudden sell their higher end MPUs, the hard drive companies were left with a sudden pool of higher end capacity drives that just sat in the channel and had to be discounted ferociously to be eventually sold) - the sudden shift to the JIT inventory model (again this by itself would be a one-time inventory hiccup - sales would drop by the number of weeks that the normal inventory model reduces to the new inventory model. Of course the longer the drives remained in the channel the more desperate the suppliers became) - the Asian currency devaluation (usual stuff - Asian sources became more competitive) - Fujitsu and IBM doing a good job - Japan consumer demand going kaput (new) ---- Compensating for the above are: - server storage - the thirst for storage just keep doubling/year (A/V new impetus) - PC price elasticity (this is really a hope since the demand seems to be sub 1000 PCs) - China demand (again this may be for cheap PCs) - Asian Currencies seem to be stabilizing - JIT model taking hold - Koreans are losing competitive position because of lack of available cash for upgrading facilities, R&D etc - most US companies are well capitalized - ok reasonably well capitalized! and more bleeding will lessen this. But last time I checked the least diversified player WDC has 0 LTDebt and a Current Ratio of 1.3 (not great on latter). Plus when WDC made that convertible offering wasn't there excess demand for the convertibles? Someone has faith in at least some of the US companies. ---- Shane.