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

To: Stitch who wrote (6285)	5/10/1999 12:44:00 AM
From: Donald Isenhower	Read Replies (2) \| Respond to of 9256

Stitch, <<<<The analysts on the call were remarkably friendly considering the size of the shortfall and seemed not to be worried about STK getting things back together>>>> <<Don't know if you ever had occasion to listen to a Komag CC but they are remarkably chummy also. Not much correlation to forward performance here. Maybe a Wall Street pharmacy had just restocked Lithium?>> Actually after reflecting on this point, I realized that it was obvious as well that these analysts had already talked to STK before the CC, so this was more of a public face being put on and I suppose that changes things somewhat. Let me give you the reasons why I started buying back into STK and why I think I should increase my holdings: 1. L.T. debt to total cap. 2% (i.e., very low debt) 2. price/book=2.0, price/cash flow=7.2, price/sales=.88 i.e., all of these are about 40% of their highest values and for a company with a 12.9 P/E that should not slip much, getting it at this price looks very good. 1999 total earnings are estimated at $1.56, the same as the earnings in the past 12 months. 3. Margins: 42% on storage products 41% on storage services (sales grew 15% over 1Q98) 73% on storage software (sales doubled over 1Q98) 4. Installed storage area network solutions (SANs) at 90 accounts in 1Q99 as opposed to 65 accounts in 4Q98, so although sales were only 30 million here, the growth looks impressive. 5. I like the technology. The new 9840 tape drives can copy at an average rate of 15 Mb/sec and can interleave UNIX and NT data on the same tape. The average random search time is 8 sec. and each tape holds 20 Gb (up to 80 Gb w/compression). They have systems that take up 16 sq. ft. of floor space that store up to 20 terabytes. Down side (i.e., why I am asking for opinions here): The 1Q99 earnings were $.06 compared to $.37 of 1Q98. Expectations were close to 1Q98 values until a warning that came very close to the 1Q99 announcement. They should have known they were going to have problems much earlier in the quarter, so I am nervous in believing that they really have their production problems with the 9840 tape drives solved (this is why I put this on this thread since I have been impressed how the people here see through the smoke screens put up by companies and analysts). Since the above information is taken from recent press announcements (e.g., HP expanding their products to include the 9840s), I may be basing my decision on biased or incomplete information. I do think that with the increase in storage seen everywhere, fast and reliable tape backups will remain essential for many people. Y2K fears if anything should help, since having the data on tape keeps it very safe from bugs that might cause problems on active systems (I am hoping to amass a fair amount of cash to prepare for the end of the year as I want to be ready to buy if people start acting in a panic mode ;-) ). So that's where I stand. Comments are welcome! (the STK thread is a very quiet thread, so there aren't too many recent comments there) Donald