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URL:  https://boards.fool.com/dvorak-on-seagate-24231867.aspx

Subject:  Dvorak On Seagate Date:  6/15/2006  12:21 PM
Author:  ultrabrite Number:  559 of 608

Seagate poised for boom

By John C. Dvorak
Last Update: 12:01 AM ET Jun 15, 2006

BERKELEY, Calif. (MarketWatch) -- Within the disk drive industry it's widely believed that any hard disk company that is solvent will see its stock make a move every year in the fall until the beginning of the following year.

While this doesn't always happen, it does happen a lot; perhaps as part of a self-fulfilling prophecy or maybe a normal cycle. Whatever the reason, Seagate (nyse-STX) looks to be poised to follow this pattern, if its new lineup is any indication.

The company recently acquired competitor Maxtor, one of my favorite drive makers and one of the companies that popularized stand-alone USB/Firewire drives. Maxtor will continue as a stand-alone brand under Seagate auspices, for the time being. Maxtor fills various holes in the retail line-up for Seagate and makes Seagate the big gorilla in the disk drive business with an estimated 40-percent market share of the $30 billion market.

I like what I'm seeing. Also CEO, William D. Watkins, is exuding confidence, a good sign in a difficult business...


http://www.marketwatch.com/News/Story/14PqQk2465HNTB2F2vW0JHh?siteid=yhoo&dist=TNMostMailed

I have read reports from Merrill Lynch saying that Seagate should benefit from the maxtor purchase. Also I was not aware that Microsoft's new Vista Operating System required so much hard disk space. Since STX is down from its recent highs I am taking a fresh look at it.

I am concerned by the dog-eat-dog mentality that seems to lead to sharp rises and then drops in profitability in this industry. Also the fact that companies like Samsung and Fujitsu are competitors is a concern. I am thinking that STX is starting to look good but I don't necessarily think it has actually bottomed yet. I thought the above article might be of interest...

JT :-)
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