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 : Western Digital (WDC) -- Ignore unavailable to you. Want to Upgrade?

To: Glenn D. Rudolph who wrote (9779)	8/29/1998 9:52:00 PM
From: AC Flyer	Read Replies (2) \| Respond to of 11057

I bought WDC at 3 and change in 1992... If WDC trades down to a similar fractional multiple of revenues in this cycle, the ultimate bottom will be in the 5 to 6 range. With the current negative market psychology, this does not seem at all unlikely to me. From its low point of around 3 in 1992, WDC traded up into the 60s over a 5 year period, for a 20x gain. Most of the price gains were in the last couple of years of this five year period. It's possible to theorize a less optimistic outlook for the next mass storage business cycle, however. The last mass storage business cycle upswing was initiated primarily by the launch and mass storage requirements of Windows 3.0. This time around, it's hard to see what kind of applications will absorb the storage capacity that is already available. Not only that, but the global economy is now in the deflationary grip of tremendous industrial overcapacity which did not exist to anything like the current extent in 1992. The disk drive companies that survive in this cycle will be the ones that figure out how to make $50 6GB drives, and then $30 10GB drives. A relentless cost focus will be required. Profits will likely be thin or non-existent.