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

To: Joseph Stumpf who wrote (3062)	5/5/1998 3:33:00 AM
From: Tom Simpson	Read Replies (1) \| Respond to of 5058

>would it not be foolish for WDC to be over dependant on IBM for GMR >heads since IBM is also a competitor of WDC?? Yes, but key word is "over". And IBM is shipping MR heads now. GMR is still a ways off, but maybe sooner rather than the later most of us thought. Yes they do compete in drives, but each focuses on different markets so there is less head to head competition than you might think. Best Regards.....Tom

To: Joseph Stumpf who wrote (3062)	5/5/1998 7:39:00 AM
From: CPAMarty	Respond to of 5058

from yahoo part 2 Look at the Big Picture (Part 2) Romandacil_II May 5 1998 12:12AM EDTHere are the excerpts from the Fool writeup and the WDC/IBM announcement I cited. Especially read that WDC/IBM announcement more carefully and critically! Remember, WDC is trying to prop up its stock price, too! ______________________________ From the Fool's Daily Trouble: Although its products are used mainly in 3.5" disk drives (98% of sales), the company believes it supplies a broader range of drive products (52 in 1997) than any other independent supplier. On the other hand, its 107 million HGAs sold last year went to just six customers, with Western Digital, Quantum (Nasdaq:QNTM - news) , and Maxtor accounting for most of its revenues (51%, 18%, and 13%, respectively versus 43%, 29%, and 12% for FY96). The shift to higher performance MR head technology should be dramatic. In FY97, Read-Rite sold 24 million MR heads, increasing MR product sales to $280 million (24% of revenues) from just $34 million the year before. MR products should account for the majority of sales in FY98. The good news is that the market has now squarely adopted MR technology, and Read-Rite is coming along. In the first quarter (ended in December), MR heads accounted for 46% of sales. Moreover, Western Digital expects to see 80% of its products using MR technology by the June quarter (up from 20% in the December quarter). That suggests that Read-Rite's overall sales should move rapidly to MR over the next few months. Plus, Western Digital's near-term dependence on Read-Rite for supply may support gross margins for now. Read-Rite also has been qualified as a suppler by five customers for the next generation 2.8 gigabyte MR heads. __________________________ SAN JOSE, Calif., May 4 (Reuters) - Western Digital Corp and International Business Machines Corp (IBM - news) said Monday they signed a letter of intent on a supply and licensing agreement under which IBM would make its leading-edge hard drive technology available to Western Digital. As currently planned, the agreement calls for IBM to supply Western Digital with its areal-density giant magnetoresistive (GMR) heads and other components for desktop hard disk drives. IBM introduced the GMR head technology last November. At that time, the company said the new heads -- which are the parts used to read and write data to disk drives -- could double the storage capacity of desktop disk drives. For IBM, the deal means new revenues for its original equipment manufacturing (OEM) business, which has been one of its main sources of revenue growth in recent periods. Western Digital said its initial plans also call for using IBM technology and designs to integrate the parts into drives and said it expects to introduce desktop drives based on IBM products and designs in the first half of calendar 1999. Financial terms were not disclosed and the entire arrangement is subject to completion of a definitive agreement, the companies said. __________________________ ÿ

To: Joseph Stumpf who wrote (3062)	5/5/1998 12:15:00 PM
From: Stitch	Read Replies (1) \| Respond to of 5058

Joe, For a novice you have a good nose for the issues. For sure WDC will not place all bets on IBM. In fact, IBM has history of reneging on OEM part commitments. But I think the palatable nature of this agreement is in the fact that they have set the high end aside (basically saying we will go ahead and compete there) while complimenting each other in the desktop sector. You are right to point out that IBM has no real history of OEM disk drive parts supply. They mustve done some pretty fast talking. Still, its a good match for both companies IMO. best, Stitch