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

To: Sam who wrote (5330)	7/30/1998 3:47:00 PM
From: John Chen	Read Replies (1) \| Respond to of 7841

Sam,re:"demand". I agree with you that 'demand' will be there. A simple way is 2x(current PCs + future unit). I can't see how one can survive with ONE drive. I see every PC will demand somekind of RAID when the price/technology bring the storage usage up to the sky. However, SEG still needs the right products at the right time and with the RIGHT price. With the 'full digital trend', internet, PC and I don't see demand slowing that much, maybe temporarily.

To: Sam who wrote (5330)	7/30/1998 5:33:00 PM
From: Stitch	Respond to of 7841

Sam, MKL, Todd, All; I agree with your post Sam which , succinctly, lays out what and how the DD sector blues played out. We tend to talk in broad labels like "overcapacity" or "too much competition" but these mask the underlying individual issues. Put simply the new players out-executed the old players. And I agree with you that the shift has had a distinctly Japanese and Korean character to it. But I cannot help but wonder if the economic morass those players reside in will not eventually cripple their efforts. For example: what now for Maxtor? Re: IDC forecasts: MKL is right in that they have always defined the high side of the various unit forecasts that are published. I think that is because they are a demand-side drive forecast versus say a DataQuest or DiskTrend which are both supply-side forecasts. The difference is that IDC relies on input from OEMs (boxmakers) rather then DD makers. Have they been too bullish in the past? Certainly. Are they too bullish now? Maybe. I doubt if they have entirely changed the structure of their forecast. I have been saying for a long time here that growth is slowing. That is, that the rate of unit growth has actually been slowing year over year for some time now. And profits have, of course, been slowing as margins have shrunk. But capacity has been growing. Significantly. There is a paradigm shift to network based storage archives. (See EMC performance) For now, however,there is also a lull in individual PC storage needs which needs bandwidth on the net to spur it again. I still think we won't see adequate levels of profitability in this sector until we see a death or two. Prime suspects? APM, KMAG, STMD Maxtor, JTS, or WDC. Other suspects for consolidation moves are RDRT, WDC, NEC, Hitachi, KMAG, and Headway. So what is the play other then short term? I prefer to place bets on who I think will be the survivors. Those that will weather the storm and continue to evolve and deliver new products. Seagate, while not technically excellent, will be a survivor by virtue of their war chest (in which I include their software operation), their relationship with enterprise storage, and their vertical integration model. Fujitsu and IBM will continue to gain share from technical leadership but I predict IBM may stumble with their head supply plan (which could cripple WDC). Quantum continues to be a big question mark to me. I do not like their MKE partnership. They may have to find other ways to go up the value added chain (as they are doing with their current acquistion). All in all it is a much trouble sector and my answer to MKL when he ask why invest in it is inadequate by any investment criteria. It is because I love it and think I know more about it then other sectors. Knowing my penchant has been helpful in that I play a very small part of my overall portfolio and let the rest be managed by better stock selectors then I am. I also stay more heavily in cash these days. All the foregoing JMO. Best, Stitch