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To: Dave Hanson who wrote (6128)	4/23/1999 2:01:00 PM
From: Mark Oliver	Read Replies (2) \| Respond to of 9256

It's interesting that you suggest shorting WDC. When I posted this press release from Komag, I found the terms of their deal to buy the media operations for WDC might be in jeopardy. It's late and I might be making a mistake, that you'll see a chance that this deal might fall apart? Prior to the announcement of the company's planned acquisition of Western Digital Corporation's media business, the company and its lenders had reached substantial agreement on a common set of terms and conditions that would be used to amend the company's three outstanding credit facilities. Documentation of this agreement, which would cure the default, was in process before the announcement date of the acquisition. The impact of the acquisition on Komag's projected financial results, however, has required the company and its lenders to reexamine the terms and conditions for amending the company's existing bank loans. As a result, the loan amendments have not been completed, but negotiations on this matter are progressing. The company and Western Digital are still negotiating the definitive agreements for the proposed acquisition. While the parties had originally hoped to close the transaction before the end of March, the closing deadline has been extended into April. The company's lenders have expressed a desire to review the substantive points of the acquisition agreement before finalization of an amended loan package. Unfortunately, the filing deadline for the company's 10-K will occur before the acquisition agreement and amended loan package are completed. As a result of this timing, the company's auditors were required to include the additional paragraph in their audit opinion. Message 9088229 Regards, Mark

To: Dave Hanson who wrote (6128)	4/23/1999 2:34:00 PM
From: Frodo Baxter	Read Replies (2) \| Respond to of 9256

As of now, I have long positions in QNTM and MXTR and short positions in WDC and of course, APM. I have also shorted MXTR puts with strikes of 5 and 7 1/2 at various expirations. I covered my KMAG shorts, left some money on the table. The valuation disparity between MXTR and WDC is striking. If I forget, make sure to remind me to post some comparables later. The dynamics are easily rational if you think how Wall Street works. WDC is a basket case; every analyst has a sell, ahem, I mean hold, on it. Since they're making noises about returning to profitability, one day, buy side is getting in in anticipation of analyst upgrades. MXTR and Hyundai, on the other hand, needed some bankers to float an IPO, a secondary, and some derivative notes. The bankers put out the buys (note that MXTR is the only HD stock that Merrill follows), management goes pounding the road show circuit, and the company defers an expense here or there to make sure the numbers are pretty. The buy side bites (although for MXTR, they didn't initially. The secondary went off without a hitch.) Then the hype dies, the deferred expenses come due, and the inevitable disappointment occurs. The stock gets downgraded, the buy side dumps. Which leads us to LK rule #2: Never, ever, ever, buy a secondary offering.