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Non-Tech : HMT TECHNOLOGY - UNDISCOVERED YET! -- Ignore unavailable to you. Want to Upgrade?

To: Ben Geh who wrote (2199)	4/20/1999 7:18:00 PM
From: T Bowl	Read Replies (2) \| Respond to of 2253

CC summary: {summarized the PR} Ron - unit shipments fell 15% QTQ - ASPs fell 5% QTQ - negative GM due to revenue and manu costs - reduced volumes and yields were not originally hitting targets on several products. - During Q we ramped an ultra smooth substrate pgm which brought yields more in line with acceptable levels. Postives - ramped 5.1GB GMR 7200rpm product for Maxtor. - sole source annoucement of Conner's 4.3GB MR product - 6.5GB quals are making excellent progress - sampling 8+ and 10+GB products - cash up during year and Q - we do plan a 2 week holiday at the end of May in order to exit JunQ at lower inventory level. Norris {more summary} - customers >10% Maxtor 40-45%. WDC/Sam/IOM 15-20% Ron - we are working in an extremely challenging environment. Record areal density pace and ASPs are at a level unheard of. 1.3GB product ramped 2 years ago c.f. 5.1GB now is selling a 400% higher areal density at a 20% lower price. Q&A 1) Bakar Q=> Outlook going fwd? A-Last Q blip seen was not growth and recovery in industry, just seasonal pattern. We are not losing biz, biz just not strong. Flat Q next. Need to see PC and HDD growth for recovery Q=> New customers going fwd? A-Some opp. See a change in mix with Conner entering this Q. Other Opps too. 2) John Potter Q=>WDC going fwd? A-we are the only ones that have qual'd to date on the new enterprise - triton. We are supplying 2 PC drives. They have announced that they will be sourcing from 2 suppliers - Komag primary. HMTT is in good position for 2nd source. 2 Quals in desktop & in qual for 2 others. Q=> Seg opp? Are they dismantling vert integ some? A-Some. Not aware of any dismantling of vert integ. Opp. Exists. We have been working with their advanced products division w\ some real high areal products. 3) John Dean Q=>Desktop vs Enterprise? A-WDC last Q was basically all enterprise & the only enterprise we shipped. Very very small amount was desktop. Q=> SEG recently leapfrogged you & RDRT on demo'd high areal density. What would you demo if you would? A-We would be in the 20GB+ range at this point. We are aiming for that. Q=>Bears out there say your technology can't compete in adv technology… A-it is well known that our tribiligy is in leadership posn. We have easily continued to transition fro TFI to MR to GMR. We have distinguished ourselves in the 7200rpm area. Qual'd at ALL of our customers. Looking good with MR and GMR future. Q=> Asian competitor capabilities? A-Our media is competing very well with the best of the asian suppliers. We are even demonstrating wvery good thin carbon overcoat capacility, <50A. Q=> Any pressure to manu in Asia? A-there was once talk with a small removeable company, but nothing serious. Hasn't and doesn't look like it is needed. We are allready staging inventory at all customers next to their plants. They want us to warehouse inventory not them due to their JIT system. 4)BT Alex Q=>What's up with the yield issue? Usually ramp with little or no problems. Going fwd? A-No. We are pushing the pace rapidly. Products are being pulled in more often. Continue wo work with all phases of the substrate product. Working on ultra-smooth media. Did not realize the impact the ultra-smooth would have on 5.1GB products. Yields are currently acceptable and improving. We are comfy at this point with them. Q=>Inv breakdown? A-2/3FG, 1/3 WIP and Raw Q=> acct payable? A-21mil Q=>Cash flow going fwd? A- was positive this Q. Will be neutral to positive at the current run rate going fwd. Q=> How long will it take to ramp up capacity if you see demand? A- just a few days. At this pt we have around 2wks inv at customers. Will work that down to ~1wk. We will have the ability to ramp up production to meet any increase in demand 5) Jeff… Q=>Units shipped & production capability? A-8-10mil cap. Little over 6mil shipped. Will run slower this Q to bring down inv. Q=>Capex 2000? A-Same going fwd. Q=> violating financial covenants? A-No recent borrowing on the credit line. Comfy. Any potential issues will be resolved in the very near future. 6) K Alexy Q=> Flat Q? Units or ASPs? A-will be close on both. Q=> Linearity of demand? A-Q pretty linear. Q=> Return to profitability? A-will not be in JunQ99. Beyond that will depend on demand and growth in HDD industry. Could easily be 2ndH99 7) Jeff Laverty Q=>When will production costs come down again? A-ASPs clearly down. This past Q had some yield issues, but they are solved. Then the vacation time will come upon us. Don't forget we had $13.0mil D&A. EBITA has been very positive lately. 8) Tim O'Toole. Q=> Quantify cost increase due to yield issues? A-No exact comment, but majority of cost increase due to yield. 9) Phil … Q=> GM neg or pos next Q? A-this Q we will trade the yield issue with the lower production cost issue. Might get slightly better JunQ, but not substantially. Q=> Cash flow going fwd? A-breakeven to positive