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

To: Larry J. who wrote (3123)	5/10/1998 6:30:00 PM
From: Stitch	Read Replies (1) \| Respond to of 5058

Larry; <<While a link is not available to support whether SEG plans to engage in major RDRT business, nor does one exist that says it won't. If anyone can replace some or all, SEG would be the one. I'll take the largest DD mfr. in the world as a new customer anyday. For all we know, the SEG business may be accretive to revenue and earnings. I don't think RDRT's future looks bleak at all, in fact, it looks very promising. >> I think Seagate's difficulties with MR are Read-Rite's biggest hope in the near term but note that RDRT must still execute at the 2.8 GB per platter level of technology. As far as I know they have not qualified on any programs at that level. I would also note that Seagate has an enormous capital investment in MR head production that they are moving to protect on the highest priority basis. I would not want to play "you bet your company" on hopes that they would be a major source of orders over ensuing quarters. That IBM has captured business with Maxtor and WDC definitely does not exclude RDRT from taking a supply position at either company. But as those two OEMs are the largest potential buyers of independent supply, and both are now buying from IBM whereas they did not before, I would not conclude that RDRT's future looks promising. One point that may spuriously be worth thinking about. Seagate, for years, spent heavily to try and develop their own, in house media capability, starting with the acquisition of a company called Greenex back about 15 years ago. This was in the early days of conversion from oxide media to thin-film media. Seagate spent millions on building up the media group but never really hit the recipe and always had to depend heavily on outside sources. Then, just four years ago they bought Conner Peripherals. The primary asset they were after was the media group which accounted for $800 million of the 1.2 Billion valuation of Conner done by the investment bank. One could speculate (wildly IMO) that history could repeat itself on the head side causing Seagate to go after RDRT. But unfortunately RDRT seems to be behind the technical curve. Best, Stitch