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

To: CPAMarty who wrote (4649)	3/8/1999 1:38:00 PM
From: Dennis R. Duke	Respond to of 5058

Are the heads in the newly announced Maxtor GMR hard drive from ReadRite? A cite to their press release: go2net.newsalert.com Which is titled: Maxtor DiamondMax Plus 5120 High-Performance Desktop Products Begin Volume Shipments PR Newswire - March 08, 1999 09:17 What really raises this question in my mind is Merrill Lynch in their upgrade report today on Maxtor states in the final paragraph of their report: "Read-Rite, a supplier to Maxtor, believes that is has closed the gap in GMR technology with IBM, which had gotten and early lead." ML is not saying that RDRT is the supplier, but they are implying it, as I read this. I look forward to some answers...... (-8 Dennis 8-)

To: CPAMarty who wrote (4649)	3/8/1999 2:25:00 PM
From: Dennis R. Duke	Read Replies (1) \| Respond to of 5058

Some pieces of the Merrill Lynch upgrade on MXTR today: "Disk drive stocks have been "hammered" due to concerns about slowing PC revenue growth and IBM's OEM deal with Dell. However, we think the industry remains healthy. Further, IBM primarily focused on the high-end, whereas Maxtor is focused on the desktop" So the market which is the majority of RDRT's units is probably not effected by the IBM/Dell deal according to this. Isn't it fun how IBM/WDC was also highly publicized, and that has not killed RDRT either? Seems to me that IBM likes to talk about deals and get a lot of paperwork out on them. I wonder about performance from IBM...more later. "We think the carnage in the prices of disk drive stocks is overdone. Concerns about slowing PC revenue growth and IBM's $16 billion deal with Dell have hammered disk drive stocks. Maxtor's shares are down by 50% since hitting its 52 week high in late January. However, we think the industry remains fundamentally healthy, albeit off to a slow start in 1Q due to a lull prior to Intel's Pentium III introduction. Dell, IBM and Compaq (Maxtor's three largest customers) continue to grow much faster than the industry.... So units could be going up soon!!! I agree with the PIII being a slowdown. The question is will unit sales go up with PIII units available now. Ah, RDRT is also down 50%ish since late January. "In addition, disk drive channel inventories appear modest at about three weeks, we estimate, down from over ten a year ago." So that much discussed near-term over supply has been exhausted according to this report, and that to should be helpful to this industry. I guess that might answer the are the units going up question above. A snip from Merrill's February 11, report on Veeco: "We expect the investment in GMR capacity to increase over the next 18 months. Demand for GMR heads is projected to grow from 100 million heads in 1999 to 775 million by 2001. "In January 1999, following the close of the quarter the company received an additional $14.4 million in orders from Read-Rite. The Read-Rite order is an addition to the $5.6 million order booked from Read-Rite in the 4Q'98. The $14.4 million in orders from Read-Rite is shippable over the next four quarters..." So RDRT is buying the needed equipment, and has been since last quarter, to deliver on the GMR business. Going back to the ML MXTR report today, ML's last paragraph say: "We think Maxtor is at the front of the pack in bringing GMR to the desktop. GMR disk drives have already been introduced by IBM and Fujitsu, but have been primarily used in servers, mobiles and high performance PCs. Western Digital has announced GMR disk drives (WD Espert and WDC Caviar) through its OEM agreement with IBM, but has not significantly ramped up production. Read-Rite, a supplier to Maxtor, believes that it has closed the gap in GMR technology with IBM, which had gotten an early lead. We expect Seagate and Quantum to ramp volume production of GMR disk drives in 2H/99." I read this as saying that ML believes that RDRT is supplying the heads for the MXTR drives. That would explain the high units of GMR that I heard on the tour after the shareholders' meeting - it could have been the ramp-up for this program. Further, I read this as saying IBM is not currently ramped up to do volume GMR production. [I wonder if some of the negative posts are from IBM supporters who know this?] So my earlier question about IBM delivering is still open, or is it? Get off the ground RDRT. It appears you might have reason to!!! Later, (-8 Dennis 8-) Let's hope the Company confirms this with a press release of its own, or Alan talks about it at the Morgan Stanley conference on Wednesday.