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

To: Henry W Singor who wrote (8364)	1/22/1999 1:39:00 AM
From: Stitch	Read Replies (1) \| Respond to of 9124

Henry, Nice post on QNTM. I have to say that for quite some time I have not been a big fan of QNTM. I have never been crazy about their operating model and had good info on how poorly their head JV with MKE was faring. I was a little apprehensive about their acquisition of ATL as well. The DEC acquisition was not all that smooth frankly. So why did I buy the dip Thursday? First and foremost I think the sector in general will have a good quarter and report successive improvements in April. Second of all I think WDC is lurching. Third of all, while it is apparent that SEG has vastly improved performance, QNTM may offer the best value right now as they have lagged in the recent exuberance. At 14X estimated earnings in 2000 they are definitely valued lower then the rest at the moment. I think questions about ATL, DLT demand, and their JV with MKE on recording heads, had bogged them down. But with DLT recording a 13% Q to Q growth, and the write off of 101M for the head operation behind them, as well as the write off of R+D at ATL ($89M), I think they can now concentrate more on their drive business which should record steady improvements over the next several weeks. Quantum still leads in the sub zero computing segment and there is no sign of prices in the PC sector cooling off. I also agree with your comment about recovery in time-to-market performance. The new Atlas models look especially good. I like the ATL prospects. ATL revenue was $54MM (up 12% Q/Q on a pro-forma basis) on a 10% Q/Q unit shipment increase. Note that the company recently introduced its new P3000 automated DLTtape library which is capable of holding 16 drives and 326 cartridges for a total capacity of up to 11.4TB. The new system carries an ASP of between $80,000 and $100,000 and is currently shipping to leading OEMs. Finally, I am gambling that QNTM has established a new trading range and should rebound a bit today with a range of 24 to 29 over the next few weeks or so unless news gets out that this quarter is turning in to a blow out. If that happens they could break resistance at 30. If I am right then there will be a chance to log a 20% gain in a few weeks and a possible reward for more patient investors. Q2 99 should be quite decent as well IMHO. Best, Stitch