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

To: Mark Oliver who wrote (3018)	4/24/1998 12:58:00 PM
From: Stitch	Read Replies (5) \| Respond to of 9256

Mark, I am really glad you started this thread. I have learned a good deal about an industry I have been part of for 27 years for one thing. For another its a sheer pleasure to read the cumulative wit of the posters. re: Your call for opinions: I bought Seagate two days ago. I basically took my whole position for that one. I am still on the fence for QNTM and am just now trying to digest their 10Q and CC. I am also long on a small WDC position (I bought on the buy-out story). But WDC doesn't figure into my longer term strategy. I am staying away from components. Most of you on the thread know that I am very bearish on them. I still believe that overcapacity in components exceeds that of the DD makers. I now believe we have seen the lows for the DD stocks. If that is true then you are correct to point out that most of us didn't recognize them. They date back to January and obviously there has been accumulation since then. I for one, was saying we had not seen the worse and expected the DD makers to set new lows after the January buying rush. It just never materialized and the buyers have held steadfast in spite of the bad news (that did materialize.) I think we will see two more quarters of marginal performance. But I also think both QNTM and SEG will have new low cost models for the 4th Qtr buying season. I am also heartened a bit by Dataquest's new forecast for PCs. Check it out at: gartner3.gartnerweb.com After reading that article you may want to go back to home and check out their opinion on capital spending by the semi cos. Its a subject near and dear to my heart. Lawrence won't like the PC forecast because it suggests a slip in revenues along with an increase in units. He would be right to be concerned if he is. It is an underlying issue that DD and PC makers have slipping ROE numbers and potential. I am sure it upsets his keen sense of value. But this market is not entirely rational and as others sense a return to level inventories I think there is money to made in the DD stocks over the next few quarters. remember that 401K money keeps pouring in and then there is the japanese postal savings freeing up for investment where it will. Long term in the DD sector a different story. I am not sure what to think. Here is a link to my Seagate rationale. Message 4167830 Now I am just gonna sit back, put on my catchers mitt, pour a scotch, and wait for Lawrence's comments. I am expecting them to come in low, fast, and hard. I hope they come soon. Scotch dulls my hand/eye coordination. Best, Stitch

To: Mark Oliver who wrote (3018)	4/24/1998 2:48:00 PM
From: Sam	Read Replies (2) \| Respond to of 9256

Mark, "who's going to make some predictions?" Well, I'll make a fool of myself, and make a timid stab at it. Mostly already well known things but here goes: 1. We're still in a trading range, but the range will be upped a little. SEG seems to broken out a little, but I suspect that is because of their plans to spin off a part of their software division. By making it public, it will give people a better way to value it (as Z wanted QNTM to do with DLT--still wish QNTM had done it/would do it even now, but....). That is probably worth $4-6 by itself ($4 would value it at about $1b, or around 3x sales--it may be worth more than that on the open market, at least in this market). 2. The range will be upped--especially if WDC gives the same look at the channel and their inventories as QNTM and SEG--because people seem cautiously optimistic that the supply/demand balance will clear up by next fall. 3. The range won't be broken on the upside yet because that optimism is tempered by being caught flat-footed last fall by Fujitsu and Maxtor suddenly going after market share with price (yes, SEG did too to some extent, but I still maintain that that was a different story than the other two, but won't go into it here--it wasn't a matter of corporate strategy that led them to do it). 4. If it becomes apparent that Maxtor or Fujitsu will either get bought or will have problems expanding capacity due to the financial difficulties of their parent, then they will all shoot upward. (I am assuming that Samsung will not be a factor in this business in the foreseeable future, and that companies like Toshiba and Hitachi will remain niche, mostly captive suppliers.) 5. At some time in the next 3-12 months, point 4 will become apparent, the drive vendors will make good money again, and we will talk about the Big 4 or Big 5 (including IBM, and perhaps one of the others). One more thing--thanks for starting this thread. Not that my investing performance has actually been improved, but reading and contributing to it has at least made it more fun and informative. At least I feel like I know why I'm not making as much money as I coulda shoulda if only....:-)( Best wishes, Sam