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Technology Stocks : HDCO - Why sudden dip? -- Ignore unavailable to you. Want to Upgrade?

To: Douglas V. Fant who wrote (461)	5/22/1998 5:58:00 PM
From: kolo55	Read Replies (2) \| Respond to of 572

More promising than the DD makers I hope. Several years ago, I looked at the valuation of the Disk Drive makers, and became interested in buying their stocks. I talked to my wife and a friend somewhat knowledgeable about the sector, and they cautioned me to not buy the DD makers. They reasoned that sooner or later the Japanese or Koreans would try to dominate this industry. I ended up looking elsewhere. So of course, the stocks doubled and some tripled. And the Japanese and Koreans had only very small market shares. I went to her and complained. She had a two word reply: "Just wait." Well last summer the truth came home. Fujitsu and Hyundai began using a scorched earth policy to kill the other players in the sector. They are willing to lose money on their DD biz in order to take market share, and that's the fight they are all in right now. I figure it will take another year for the excess capacity to be reasonably utilized, and at that time, there will still be two Asian tigers in the hen house. I'd wait for the feathers to settle a bit there, before we can see what's what. Hadco simply has to weather the Asian storm a bit, and when demand picks back up in Asia, things will improve here. Also the business units that are really valuable, backplanes and quickturns, should grow nicely. I suspect their Malaysian plant competes very well in Asia, with the ringgit devaluation. They just need to get their volumes up there and the operating leverage will really work in their favor. But I still think this company has a tough six months to get through, before the future brightens. I'm a bit skeptical about a big rebound in orders this fall, and even more skeptical about firmer prices. Paul