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

To: Robert Douglas who wrote (5194)	1/8/1999 12:12:00 PM
From: Stitch	Read Replies (1) \| Respond to of 9256

Folks, I was just getting ready to post to LK (and his sycophant prodigal son Todd) to say fundamentally the same thing Robert posted. I believe it would constitute fraud but I am not a lawyer so who knows. As Allan stated, it would at the minimum, be bad practice under accounting rules, and, as Robert pointed out, would probably get the SEC sniffing in view of the new offering. Guys I remember well the rumors about IBM and HTCH on these threads a few months ago. Or was that all in private message? In any case, most everyone knew that IBM was negotiating a high level deal with HTCH. I think IBM got what they wanted, which was a 6 GB Travelstar at a suddenly accelerated schedule to help head off Fujitsu at the pass. (There is no secret that Fujitsu has come after the 2.5 inch business with a fury.) Lawrence, I think it is funny as hell that you are muttering conspiracy over here like a crazed Mel Gibson in a bad movie while you are presenting yourself as some pie eyed optimist on the Asia thread. <G> Ya know, now that I think about it, why didn't I buy HTCH? Maybe because I felt that a deal with IBM is a kiss of death like another company we know. So I got bit twice by that feeling. I didn't buy HTCH and did short WDC. Ouch twice. In any case, cheers all...(you just gotta love Seagate. It ain't Amazon.com but it is a fast enough ride for me.<GG> Or am I straying off topic?) Best, Stitch

To: Robert Douglas who wrote (5194)	1/8/1999 1:49:00 PM
From: Mark Madden	Read Replies (1) \| Respond to of 9256

Robert, <While pumping up earnings right before an offering is a time-honored tradition, the scene you painted is highly questionable in its legality and would likely provoke SEC investigation if discovered> I agree, it is not unusual for companies to "pump up" earnings any time they can. However, I think Lawrence's example of $5 to $1 is exaggerated. I think the conference call mentioned something like $1.90 to $1.60. Anyway there are three common practice reasons for the higher front end price. 1. It is common to add the cost of research and development to early runs of a product. Look at high density TV. 2. It is common to pass on costs for accelerating production to the buyer. Of course the increased cost also carries profit. 3. The customer can't expect cut rate deals when their is heavy product demand. The customer had to pay asking price or go without. A purchasing agreement may exist for lower prices in the future but they would never add statements indicating the purpose is to front end profit. Instead they would indicate the decreased price is in anticipation of lower manufacturing costs and/or paid off research. It would be tough for the SEC to prove different. Actually, us rational beings know that most new products carry higher front end profit until supply catches up with demand. We also know companies make public offerings when the company looks the most attractive to the public. <g> Mark