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

To: shane forbes who wrote (7769)	4/24/1998 7:07:00 PM
From: Stitch	Read Replies (1) \| Respond to of 9124

Shane- In your inventory of reasons for the DD blues you mentioned: <<- Fujitsu and IBM doing a good job>> Most folks put Maxtor at the top of that list. The have had an enormous resurgence and have been first to market in the last two steps in the density race. Here is a research article published in January by Lehman about Maxtor after the analyst visited their facilty in Singapore. By the way, most of Maxtor's production is in Singapore and their associated labor cost is little different from anyone elses. They may, however, be hampered by their parent company's home economy sometime in the future. On to the article: Lehman Bros. Research Rept January 28, 1998 Competitive Update - Maxtor Gaining Share While Maxtor has yet to report its quarterly results, we expect that it will post its first profitable quarter after > $500 million in losses over the last several years. The company has been focusing on returning to financial health and has - over the past two quarters - successfully delivered volume, time-to market, competitive desktop drive offerings, enabling the company to gain market share in a difficult industry environment. We expect the company will ship over 3.4 MM units in its December quarter and that revenues will increase sequentially in excess of 30%. Maxtor has made significant inroads into several strategic OEM accounts including Compaq, IBM and Dell. We believe these 3 accounts in total represent approx. 50% of Maxtor's business with total OEM representing 70% of sales. We believe that these share gains were achieved largely at the expense of WD. Maxtor has successfully achieved key OEM penetration through its leading MR desktop products. Like Quantum, the company transitioned early to MR and has been able to achieve better pricing than many of its peers in what has been a difficult industry environment. Maxtor is now in its 3rd generation of MR and ships 100% MR products. Going forward, it remains to be seen if Maxtor can continue to execute and whether it can fund further expansion plans. The company is nearing its capacity limits at its Singapore plant (approx. 4MM drives/quarter) and plans to add a new plant in 98/99 with capacity for an additional 5MM drives/quarter. If successful at both these initiatives, WD may experience increased difficulty reclaiming lost market share at these strategic accounts.