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

To: Duker who wrote (8356)	1/21/1999 8:58:00 AM
From: Sam	Read Replies (1) \| Respond to of 9124

See DD thread: Message 7386344 All in all, a positive report. Here are a few notes on the CC to supplement the earlier notes given (I'll try not to repeat anything, some of this is my own commentary, not theirs). They are positive about the shape the sector is in, as well as the sector's customers. They were pretty conservative last quarter on their build. That is one of the liabilities of their model; apparently, they have to make decisions about their ramp early, and can't just swing on a dime to boost production if demand shows up stronger than they expected, as it did this past quarter. I'm a little surprised at this, I would have thought that their relationship with MKE might have had a little more flexibility built into it. I'm guessing that this is why SEG had such a great last 2 weeks of the quarter, and why they blew away their numbers by so much. Since they are vertically integrated, they have better and faster access to supplies than the other none vertically integrated drive vendors do, who have to coordinate with outside people more. so when supply turned out stronger than everyone expected, they could move more quickly. DLT and ATL did very very well. Now 28% of revenue. Looking at 25% growth going forward, including their "partners", counting royalty and licensing revenue. Not bad. I think that that only counts DLT; ATL is higher. The library business, they say, is growing at 40%/yr, and they think ATL can grow somewhat faster than that, perhaps 50%. They talked about how LTO is nowhere to be seen at this point. They didn't even mention Mammouth, and no one asked; I guessing they aren't too visible right now either, especially since EXBT is still coming out with new generation DLT products to stay alive. EXBT still trades between 5 and 6 for a reason. QNTM says they are the only vendor to qualify drives at all top 10 PC vendors, and are number one suppler at top 4. CPQ and HWP accounted for 14 and 12 percent of revenue, respectively, top 6 vendors (includes GTW, AAPL, IBM and DELL along with the other two) accounted for 44% of revenue (total, including tape and drive). However, their desktop business was only marginally profitable despite "significant" improvement in GM Q to Q. This suggests to me that QNTM is being pretty aggressive on price. Or that MKE is getting a lot of money [relatively speaking] for their part in production. ASP declines were about 8% for the Q, down substantially. Higher ASP declines on the high end, they say. Maybe profitable on high end in FY00 Q2 or Q3, but impossible to predict with accuracy, depends on the overall pricing environment. It probably won't happen that they spin off or sell the drive business, but if they did, the stock would be trading much higher than it is today (not to revive old debates on this thread or anything). Personally, though, I wish they would. All in all, I think the stock deserves a new, higher trading range, perhaps 25-26 to 33-35. I'm guessing that it will get something like that. And if the drive business gets more profitable, if this supply/demand balance remains in place, it will go on to new all time highs later this year. Regards, Sam