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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: Tom Simpson who wrote (3487)	6/3/1998 5:50:00 PM
From: T Bowl	Read Replies (3) \| Respond to of 9256

The KMAG news yesterday wasn't a surprise to anyone obviously. That's my guess why the whole DD sector didn't tank right off the bat today. I think that the general tech scramble caused most of our pain. KMAGs huge write-offs are due to the fact that their equipment simply can't produce the media at competitive yields(price) in this environment and that they find themselves smack dab in the middle of an industry swamped in oversupply with WAY too much capacity online. Their equipment was very successful at making 1GB TFI disks cheap and fast. They were one of the best, they made boat loads of money, it's just nobody wants 1GB TFI platters anymore. Those days are gone... I found the following statement alarming: "While the majority of our production equipment and facilities remain physically in place, the one-time second quarter charge will effectively lower the depreciation bases of these assets, thus improving our fixed cost structure... ..We anticipate that these actions will support gross margins in the mid to high 20% range by the second half of 1999" Read that again... Well, yeah! Heck, they might as well write it all off and totally eliminate D&A for the next few years!! That'll solve all their problems. That reaks quite closely of Mr. Kam's money biz... (except the fact that they failed to make some money during a few of the years) What an absolute joke! I'm just sorry I closed out my short a while back. It'll be interesting to see what the D&A going fwd will be. This has all been caused by the company failing to keep up with the technology. They got caught out, they lost, they just cost the shareholders gobs of money. This sounds awfully similar to what RDRT did a few months ago with all of their TFI equipment: "The company recorded an after tax charge of $91.8 million primarily for the write-off of assets and inventory associated with the faster than expected phase-out of its advanced inductive recording head products." OK folks, any other company come to mind that we could hear from? Glad to be short APM, todd BTW, if anyone hears me touting an Indy media player in the near future please just shoot me! This industry stinks! FWIW, I opened an IVAC short today - I think you'll see a delayed reaction coming.