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

To: Ron M who wrote (5306)	1/22/1999 3:10:00 PM
From: Alan Casey	Read Replies (1) \| Respond to of 9256

January 22, 1999 11:08 MAXTOR CORP amends offer. 7.8 mil common stock. Excerpted from S-3/A filed on 01/22 by MAXTOR CORP: MAXTOR CORP amends offer. 7.8 mil common stock. SUBJECT TO COMPLETION, DATED JANUARY 22, 1999 PROSPECTUS 7,800,000 SHARES [MAXTOR CORPORATION LOGO] COMMON STOCK $ PER SHARE Maxtor Corporation is selling 7,800,000 shares of its common stock. The underwriters named in this prospectus may purchase up to 1,170,000 additional shares of common stock from Maxtor under certain circumstances. In a separate offering, DECS Trust IV is offering 15,500,000 DECS. The terms of the DECS provide that DECS Trust IV may distribute shares of Maxtor common stock owned by Hyundai Electronics America to DECS holders on or about , 2002, or upon earlier liquidation of DECS Trust IV under certain circumstances. DECS Trust IV may distribute up to an additional 2,325,000 shares of Maxtor common stock owned by Hyundai Electronics America to cover rights to purchase additional DECS granted to the underwriters of the DECS offering. Maxtor will not receive any of the proceeds from the sale of DECS or the delivery of the Maxtor common stock owned by Hyundai Electronics America. Maxtor's common stock is quoted on the Nasdaq National Market under the symbol "MXTR." The last reported sale price of the common stock on the Nasdaq National Market on January 19, 1999, was $19.31 per share. INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 6. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. TABLE CAPTION PER SHARE TOTAL S C C Public Offering Price....................................... $ $ Underwriting Discounts...................................... $ $ Proceeds to Maxtor (before expenses)........................ $ $ TABLE The underwriters are offering the shares subject to various conditions. The underwriters expect to deliver the shares to purchasers on or about , 1999. SALOMON SMITH BARNEY HAMBRECHT & QUIST LEHMAN BROTHERS MERRILL LYNCH & CO. NATIONSBANC MONTGOMERY SECURITIES LLC , 1999 (End of Item Excerpt) (End of Item Excerpt) USE OF PROCEEDS Our anticipated net proceeds from the sale of our common stock in the stock offering are estimated to be approximately $142.9 million (approximately $164.6 million if the underwriters fully exercise their right to purchase additional shares of common stock in the stock offering), after deducting the underwriting discounts and estimated offering expenses payable by Maxtor. We will not receive any proceeds from the sale of the DECS. We will use up to approximately $55.0 million of the net proceeds from the stock offering to prepay without penalty outstanding aggregate principal indebtedness of $55.0 million owing to Hyundai Electronics America under a subordinated note due July 31, 2001. The subordinated note bears interest at six-month LIBOR plus 2%. The remaining approximately $87.9 million of the net proceeds from the stock offering (approximately $109.6 million if the underwriters fully exercise their right to purchase additional shares of common stock in the stock offering) will be used for capital expenditures, working capital and general corporate purposes. Pending such uses, we will invest the net proceeds of the stock offering in investment grade, interest-bearing securities. (End of Item Excerpt) ------------------------------------------------------------------------

To: Ron M who wrote (5306)	1/22/1999 3:22:00 PM
From: Mark Madden	Read Replies (2) \| Respond to of 9256

After hearing conference calls and seeing earnings results I get the impression that great management is responsible for turning these companies around. The CEO's say increased efficiencies increase margins and it is their programs that increase efficiencies. Perhaps they are trying to make themselves look good after experiencing improved conditions that they had no control over. It seems the companies were efficient when demand was high and the companies were running at full capacity. When demand dropped companies became inefficient because they reacted too slow and had excessive inventories in the pipeline. With excessive inventory and no bargaining power the prices dropped too fast to support their bloated capacity. It sounds that they finally aligned capacity with demand. I am not trying to say it is a small thing to align capacity with demand. Companies must be able to predict demand to make today's capacity decisions. Capacity changes are difficult. They can not make fast changes in capacity because it takes time to increase numbers of trained experience people and it takes time to make sophisticated equipment operational. Reducing capacity throws away investments before their initial costs are recovered. And, it inevitably causes increased ramp up costs later. It seems predicting demand is the key for companies to perform efficiently and it is important for us in predicting stock prices. SI has many experts that keep us well informed on the technical aspects of constructing drives, drive capacity and speed, and development of future drive technologies. This wasn't enough to save some of us from disappointing results over the past year. We couldn't see how deep or long the downturn would be because we couldn't predict the demand. I'm sure the industry spends millions trying to predict demand and still missed the mark as badly as we did. This last downturn is the worst I have seen in ten years of following the industry. I guess the moon, the sun, the planets and the sun all aligned just right to cause the anomaly. Closer to the point, maybe it was:  Windows 98 being late and non-eventful  Competitive forces forcing Intel to release Pentium II chips before earlier chips had finished their run  Competitive computer prices giving first time buyers options of cheap low capacity computers  The Asian crisis forcing some companies to dump inventories at any cost At any rate, demand fell, companies became inefficient, and stock prices dropped, even though technology soared to increase drive performance at incredible levels. How can we predict demand better in the future? Are there indicators that could help us? I noticed the semiconductor book to bill ratio (considered a lagging indicator) peaked in February 97 and bottomed in October 98. The drive prices in one of the warehouse retailers began dropping more frequently and further in February 97. These are two indicators I will take more seriously in the future. I think the projections and predictions by many of the analysts are designed more to get attention than they are to inform. What other indicators might we use to predict future demand? Any ideas? Mark