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

To: La Traguhs who wrote (6064)	4/14/1999 4:01:00 AM
From: Z Analyzer	Read Replies (3) \| Respond to of 9256

a few more points worth mentioning: -the significance of buying back 10 percent of your shares in 3 months should not be underestimated, especially when done so with only modest reductions in cash levels. The continuation of this trend will quickly yield dramatic changes in financial results. You may recall that heavy share repurchases have been one of the things which has been integral to IBM's return from the dead. Buy backs of such magnitude will accomplish what I suggested to Al Shugart years ago when Seagate stock was selling at 12 and about four times earnings. I said, "without being too facetious, pretty soon you and I will be the only remaining shareholders". A second point worth mentioning from a Devils advocates point of view, is that Seagate has once again become highly dependent on the high-end for profitability. When asked whether the desktop segment was profitable, the response was that it had double-digit gross margins. How impressive double-digit margins are depends heavily on whether transfer pricing of major components such as heads is at market prices or something less. Clearly, the high-end is once again highly profitable. This raises the question of whether it will remain so when competitive 10,000 rpm drives are available in adequate supply. -Z

To: La Traguhs who wrote (6064)	4/14/1999 9:19:00 AM
From: Sam	Respond to of 9256

LT, "[L]ukewarm desktop performance" seems to me to be a generous way of describing it.

To: La Traguhs who wrote (6064)	4/15/1999 8:29:00 PM
From: Mark Oliver	Read Replies (1) \| Respond to of 9256

Well, here we go with some worries over how spending will be affected by Y2K. Paul Fox at NationsBanc Montgomery Securities seems to put the damper on what could've been a good day for storage stocks. So far, I haven't seen any seriously bad news from anyone except Compaq and depending on how you look that it can be explained away as company specific, we hope. Apple came in with brilliant growth in earnings and revenues, Dell seems to think business as usual, HP may or may not be doing well depending on whether you listen to the CEO or investor relations, and finally Intel still seems to be cruising along. So like have been saying for at least a year now, it seems likely that there must be some ebb and flow around the tidal pull of Y2K. It simply must have an effect. So, here we see Paul Fox citing concerns of Y2K. Is he the first or has he simply gone crazy? Once you assume that there will be a break in the normal consistent buying patterns for storage, can you assume that these anomalies will be short-lived and if you look at the period of one year versus one quarter will you see the trend has remained true over the longer period. It would seem likely that the market will not be very forgiving of one or two missed quarters. There should be the typical crashing reaction to a crisis of confidence followed by some sort of rationality that says we can see the world will return to normal next summer. So I'd like to propose to the thread, again, are we going to see the market scared into a major sell off as Y2K concerns grow? By the way, for those of you who may not have noticed, enterprise software vendors have gotten a big chop as their earnings have actually fallen and they've said it was due to spending shifts related to Y2K. In some cases, there seems to be consideration that equipment platforms will be replaced and therefore buying software this time is not wise. Not necessarily a bad scenario for hardware vendors. Regards, Mark RESEARCH ALERT - Montgomery cuts data storage cos NEW YORK, April 15 (Reuters) - NationsBanc Montgomery Securities cut its ratings on four makers of data storage equipment based on a survey that suggested a macro-economic spending slowdown associated with Year 2000 repair work. -- In a research note, analyst Paul Fox said he had his ratings to hold from buy for EMC Corp. (NYSE:EMC - news), Seagate Technology Inc. (NYSE:SEG - news), Hutchinson Technology Inc. (Nasdaq:HTCH - news) and Maxtor Corp. (Nasdaq:MXTR - news). -- The analyst said a survey of 45 major companies to determine the potential for a freeze in new purchasing related to repair of potential Year 2000 glitches, found that 30 of the companies, or 67 percent, would significantly slow or freeze spending by the fourth quarter of this year. -- As a result, Fox cut his fourth quarter earnings estimate on EMC to $0.51 from $0.59 previously. The consensus had been $0.61, he noted. ''We would not be surprised to see some very good quarters (Q1 to Q3), particularly because there is acceleration prior to freezes,'' Fox wrote. -- EMC stock lost 10 percent to to 112, down 13 on the day, in composite U.S. stock exchange trading. Hutchinson gave up 2-19/32 to 20-7/8, Seagate fell 1/2 to 27-11/16, and Maxtor dropped 7/8 to 7-7/16. -- In response to its stock's plunge, EMC issued a statement reiterating its expectation that its revenues and earnings will grow in excess of 30 percent in 1999. It cited a survey of more than 250 corporate customers it conducted in the first quarter of 1999 to support its bullish views. biz.yahoo.com