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

To: CPAMarty who wrote (4747)	4/23/1999 12:56:00 PM
From: Mark Oliver	Respond to of 5058

Thanks Marty. Here's a post from the Disk Drive Discussion Forum. It speaks of the Samsung problems. Also discusses a 6.4 gig program that might announce in June. It would be nice if Read Rite's involved. Message 9105831 Regards, Mark

To: CPAMarty who wrote (4747)	4/23/1999 8:21:00 PM
From: Alain Dubreuil	Respond to of 5058

Dear Marty some comments from Value Line Read-Rite's recovery has hit a snag ... In March, the company announced that revenues in the second quarter would fall roughly 10% from the December-period level. Several factors accounted for the shortfall. One is the ongoing industry trend of fewer heads per disk drive. The second is the fierce competition in the industry, which is pushing component prices down. Finally, it appears that personal computer sales may be slowing, which, in turn, leads to lower purchases of disk drives and disk-drive components. Given these factors, and the possibility of some sales disruptions as the industry makes the transition to a new head technology, we've reduced our fiscal 1999 (ends October 3rd) share-net estimate by $0.20. ... but the company's longer-term prospects look better. Read-Rite has been working to improve productivity, cycle times, and facility utilization, which will boost its competitiveness. It also closed its manufacturing operations in Malaysia and cut head count last year, and is working on further cost containment measures, all of which should help widen margins. Too, it is working on new products, most importantly heads based on Giant Magnetoresistive technology, which appears likely to become the next industry standard. An agreement between Western Digital and IBM may cut sales of Read-Rite heads to WD, but there is a chance that Quantum could become a customer now that it has exited the head manufacturing business. All told, earnings could rise to $2.00 a share by 2002-2004. Venturesome investors with a long-range view may be interested in these out-of-favor shares. The neutrally ranked stock has wide price recovery potential for the 3- to 5-year haul. Conservative accounts should note, though, that this industry is marked by volatile swings in profitability. And Read-Rite's customer base is quite narrow. Too, the company is the subject of legal action and an unfavorable outcome could have a material adverse effect on Read-Rite. George A. Niemond April 23, 1999 Alain Dubreuil