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Technology Stocks : INVX Innovex Comdex Winner !! -- Ignore unavailable to you. Want to Upgrade?

To: Gerald Walls who wrote (2453)	4/29/1998 4:09:00 PM
From: Mark Oliver	Respond to of 3029

It would be nice if H&Q also covered Innovex. Then we could have a better view perhaps. In the end, near term will be determined by improved sales of conventional interconnects. 83% of interconnects shipped last quarter were MR. This trend is playing out, but we can see any improvement in shipments this quarter will be of the higher end nature. The main thing H&Q is saying, as are most other related press releases, is that component demand is rising as inventories are returning to normal. H&Q says the same. This is good for Innovex. Innovex was hurt by lower volume cutting into margins. As volume returns to normal, so will earnings. Does the contest between TSA vs HIF seem to be won by this statement from H&Q? I don't think so. Still, it is a forgone conclusion that Innovex will loose some of the high end to these competitive interconnects. Remember, Read Rite is developing a flex circuit, and IBM and Fujitsu both have in house developed connections. So, can anything make this right? Maybe flex circuits used in chip packaging will pick up the slack, and on the near term it seems like software will pull in some revenues and Litchfields traditional businesses are growing. I guess I'm not really worried about Hutchinson's TSA as I am about the question of less platters per drive and inventory. If we can find a reason for people to need 6 gig and up drives, the problems will all be solved. If we see 2+ gig per platter and 3 next year, how many platters will we see on the average PC? Growing enterprise sales will help as storage goes out of the desktop and into the enterprise. Low price computers should be selling with 1 or 2 platters for the forseeable future. If these low cost systems drive enterprise, maybe there will be a balance? This trend has been obvious if you look at EMC and STK. These guys are seeing huge demand and shrinking costs as SEG, IBM and all bash it out in a price war. Eventually, these drives will be the high end using TSA, HIF or whatever. At the moment, all these sales are feeding into INVX's WAT program. That should give Innovex a very good chance of sequential earnings growth over the next 2 quarters. Seems like looking farther than 2 quarters is nearly impossible. We'll see. Regards, Mark