Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: CPAMarty who wrote (3746)	7/21/1998 10:02:00 AM
From: Larry J.	Read Replies (1) \| Respond to of 5058

Seagate to Host Conference Call: 7/21, 9:00 A.M. PDT biz.yahoo.com Maybe they plan to announce that DD demand is outstripping their ability to supply heads and that they will have to substantially bump their rate of procurement from outside suppliers. Better yet, maybe they plan to just buy RDRT and be done with it. I can dream, can't I???<g> Larry

To: CPAMarty who wrote (3746)	7/21/1998 10:41:00 AM
From: T Bowl	Read Replies (2) \| Respond to of 5058

Marty - <<my point is that when WDC starts producing GMR products, RDRT will be there to compete with IBM. >> I hate to continue to be the bear, but I can't disagree with you more on that one... They might both be supplying WDC, but I don't think they will be competing against each other often. I believe the WDC/IBM relationship was formed out of necessity from both partners. IBM clearly is the technological leader in the areal density game. They always have been and always will be especially if the WDC relationship works. They need WDC to help spread their enormous R&D costs. WDC needs IBM to survive in today's DD market. I think everyone out there admits that available DD capacity has outpaced user demands recently, and there are no "killer" apps out there currently that look like they will reverse that trend. In that kind of market, the best way to compete is to push the areal density as hard as you possibly can. Your GMs in this market depend primarily IMO on your time-to-market ability and the reduction in DD costs. What's the easiest way to reduce the cost of a DD? Reduce components. IMO WDC had NO other choice but to establish a relationship with IBM. They would have been left to fade away otherwise in an ever increasingly competive market that they had by choice lagged behind with their late TFI/MR transition. While that approach may have led to a temporarily beneficial market share effect, that entire business model is flawed given today's DD market conditions. Out of the IBM related CC held by WDC I submit the following comments: <<We told you last October that we were going to "change the game." I think it's fair to say that we not only changed the game, but we're changing the playing field big-time... Last fall we rolled up our sleeves, did some sole-searching and seriously examined our biz model. After that we concluded we must pursue a serious relationship with IBM. In the best interest of all at WDC... The Desktop biz will gain special access to GMR heads and technologies simultaneous with IBMs development of these platforms... agreement does NOT preclude other head suppliers from competing on future NON-IBM desktop pgms at WD. As well as on all of our ESG pgms... IBM supplies about 50% of the MR heads in the past MarQ98. With this agreement that share could rise depending on the success of this relationship.>> Special access to GMR heads and other technologies simultaneous with IBMs development? This is not simply a head supply agreement. WDC is attempting to be a time-to-market leader on GMR products. The big question for RDRT longs is whether RDRTs recent statement of "passing the areal density leader in 6 to 12 months" is actually achievable? My bet is NO WAY. History shows it hasn't happened before and if the fixed costs can be spread over WDCs volume then it will allow IBM to push harder. Talk is cheap, R&D is not. Browse around the IBM storage site for a while and you will find page after page of areal density leadership history of that company. It is quite amazing! What they have lacked in the past is the high volume. That is soon to change. The other question you must ask is how many of the WDC programs will use non-IBM designs? My bet is very few of the high volume products. RDRT will be stuck competing for ESG(with a well entrenched and established TDK pgm) and the sub 0 PC DD(and how much is to be made off of a DD that costs <$85?). todd the bear

To: CPAMarty who wrote (3746)	7/21/1998 11:11:00 AM
From: Trial Member	Read Replies (2) \| Respond to of 5058

Perhaps these comments by an industry insider regarding the recent RDRT/HMT press release might help define the relationship between IBM and RDRT. "This is very timely news for Read-Rite, less so for HMTT. The media HMT is demo-ing is less exciting than what either Seagate or IBM is showing off, but for RR, an 11 GbSI demo is huge. It means that they can supply on a technical level, if not a manufactureable level, the highest Q heads in the land and will be attractive to IBM, SEG, Maxtor, and Fujitsu who could be looking to outsource up to 20% of their respective heads manufacturing. And since the other indy head mfc's like App Mag, ALPS, Headway, Yamaha, etc. have yet to be included in such a demo, it could put RDRT in the pole position. It could also prove fatal for WDC. These guys were so impatient with RDRT that they signed a cross-liscensing agreement with IBM that locked them in as the bottom-feeder drive manufacturer for IBM, with no foreseeable chance to grab any further mkt share from SEG, ... . Had they waited for this demo, they could have conceivably organized the assembly of this demo as they are the principal customers for both RDRT and HMTT. They f***ed up. They will go out of business or end up in IBM's stomach of acquisition by Q4 '99. HMT used this to simply reaffirm their status as the premier manufacturer of recording media in any format in the world."