3SOF

Seagate Technology engages in the design, manufacture, and marketing of products for storage, retrieval, and management of data on computer and data communications systems. It offers rigid disc drives that are used as the primary medium for storing electronic information in systems ranging from desktop computers and consumer electronics to data centers delivering information over corporate networks and the Internet. The company's products include the Cheetah family for Internet and e-commerce servers, data mining and data warehousing, mainframes and supercomputers, department/enterprise servers and workstations, transaction processing, professional video and graphics, and medical imaging; U Series X and Barracuda for desktop applications, workstations, and low-end server applications; U-9 Series of rigid disc drives for use in personal video recorder, video game consoles, audio jukeboxes, home media centers, and home and industrial security systems; and Momentus family for notebook computer running popular office applications, as well as laptops for business, government, and education environments. Seagate sells its rigid disc drives primarily to original equipment manufacturers, distributors, dealers, system integrators, and retailers throughout the world. The company was founded in 1979.It was formerly known as Seagate Technology Holdings and changed its name to Seagate Technology in 2002. The company is headquartered in George Town, Cayman Islands


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I've traded this company previously and have first hand experience with their products (Several of our vendors use their Hard Drives in their Digital Video Recorders) - all indicate a favorable performance to that of Maxtor or Western Digital.

At this time, the stock looks under valued (trading at 16.43 as of this message)

From Monday's edition of Forbes on-line:

Piper Jaffray reiterated an "outperform" rating on Seagate Technology (nyse: STX - news - people ) but lowered estimates and the price target, citing reports that the company could possibly lose the 1-inch drive iPod mini business at Apple Computer (nasdaq: AAPL - news - people ).

Piper Jaffray noted that the reports suggest that Apple is in the process of completely transitioning from 1-inch hard drive to flash-memory-enabled iPod mini players.

The research firm said Seagate's recent weakness presented a buying opportunity. "Although we believe that increased flash memory encroachment could impact 1-inch drives in the near term, the sheer number of new applications incorporating 1-inch drives should more than offset such losses by mid-2006" Piper Jaffray said.

The firm added, "We continue to believe the stock offers a great buying opportunity with a current trading multiple of 8.9 times calendar 2006 earnings and 1.0 times calendar 2006 revenues (in addition to a dividend yield of 1.85%)."

Piper Jaffray lowered Seagate's fiscal 2006 estimate to earnings of $1.96 per share from $2.01, and lowered the fiscal 2007 estimate to earnings of $2.09 from $2.18. It cut the price target to $25 from $27.

The firm added that Seagate shares warrant a significant premium to competitors Western Digital (nyse: WDC - news - people ) and Maxtor (nyse: MXO - news - people ) since the company is the disk drive industry's largest with the widest range of products.


Would appreciate your opinions and T/A of this opportunity.

As Always, Thanks in advance and Best Regards,

KCS

QuoteFrom Monday's edition of Forbes on-line:

Piper Jaffray reiterated an "outperform" rating on Seagate Technology (nyse: STX - news - people ) but lowered estimates and the price target, citing reports that the company could possibly lose the 1-inch drive iPod mini business at Apple Computer (nasdaq: AAPL - news - people ).

That upgrade sounds like a downgrade.  ???

Interesting that on Monday, STX had a gap down opening at 17.60, which I'd rate as a STRONG SELL.

Hi KCscott

Seagate are being punished due to Hutchinson's warning today. (Seagate is a Hutchinson customer - 5% of Hutchinson's revenue as fare as I remember).

Piper Jaffray comments

QuoteSeagate (STX) is down nearly 5% on the news and represents a stellar buying
opportunity trading at less than 9x forward earnings and offering nearly a 2%
dividend yield. We continue to believe that Seagate will not lose all of its 1-inch
drive business at Apple as some reports have suggested. Please see our note dated
08.29.2005 for more details. Reiterate Outperform and $25 price target (18-20x
P/E, 1.2-1.4x P/S). Risks include available-for-sale share overhang, share losses at a
significant customer and fall-off in PC demand.

Merrill Lunch comments:

Quoteo Implications for Seagate: Although, Hutchinson's preannouncement is
negative for Seagate, some of our other research on the HDD component side is
more supportive Seagate's ability to make its numbers.

I would probably not buy before the dust has settled (but I have been wrong before!)

Thanks for the TA Melf - Thanks for the insight Mike.

I'm sure today's drop will domino the stops and see more losses before a floor sets.

Question:

In your opinion, how do you determine support?

When I look at the STX chart, it appears to be at $16

(Another good question is how do you post charts on here? ??? - The [img} tags don't seem to work on the stockcharts.com charts)

Back to STX - it looks like it touched 16 end of Feb and Mid April and came back both times.
But it also looks like a head and shoulders on the one year which is very Bear I believe.

Thanks again.

KCS

Hi KSCott,

I mave mailed you a short manual for posting images. I am not very satisfied with it so let me spare the rest of the forum but with a little trial and error the manual should do the trick!

It is normally easy to find support levels for stocks but STX is a real challenge.

I normally find this web site useful (for the lazy of us!): http://www.stockta.com/cgi-bin/analysis.pl?symb=STX&num1=15&cobrand=&mode=stock

The site does however only look at the tested support and resistance levels for the last 6 months and as STX is trading at  a 6 month low there are not much help in this case.

Another popular way to determine support is the moving averages like MA50 and MA 200 but again STX trades below both off these.

I also normally use Bollinger bands where the lower band would indicate support but again not in this case  ???

The final indicator I am using is RSI. A RSI value below 30 indicates that the stock is heading into oversold territory. As you can see on the 1 year chart below STX has reversed twice when RSI 30 is reached. This combined with the support around 16.45 which has been tested in December and April might give you good support now as well.

The chart also features a large gap up from 14.99 to 15.54. The low valuation of the company based on historical earnings should hopefully prevent this gap to be closed but it is cause for concern if there are further bad news on the sector or company.

Mike

Hi KCScott,

Don't know if you are still interested in this stock but I could see it bounce today. The support at 16.45 seems to hold and Hutchinson was actually up yesterday.

I think that Seagate is attractive here but it is not the only good pick in the sector. I prefer KOMG for fundamental reasons and I will try to buy that today.

Still watching STX - Big volume and down another .43 as of Noon EDT.

Thanks Mike - Best of luck on your trade with KOMG

Technically is doesn't look good for STX. I wouldn't buy before there is a decisive move to the upside or it close the gap.

KOMG is also falling today even though less than STX. I have a buy order at 32.57. There is a solid support at 32.5.

I'm just trying to figure where the floor will be for STX right now.

Actually, I expect to be a buyer pretty soon based purely on valuation.
This company is too strong and too financially sound to belly up for an extended period

One of the things in play through Friday is the holiday effect:

http://stockcharts.com/education/TradingStrategies/preHolidayEffect.html

a lot of selling going on before labor day that ends up being very profitable by year end

Quote from: KCScott on September 01, 2005, 12:41:34 PM
I'm just trying to figure where the floor will be for STX right now.

KC,

So is everyone else!  SFE has broken through three support levels in the past five trading days.

Quote
Actually, I expect to be a buyer pretty soon based purely on valuation.
This company is too strong and too financially sound to belly up for an extended period

This is one of those "counter-intuitive" things, but let's walk through it:

Scroll down and look at the Inverse H&S breakout in November, 2004.  At that time, trailing twelve month earnings were $0.24, so at the point of the upside breakout, STX was trading at a P/E of 60 basis TTM. 

That's a very high P/E, and we might have been inclined to pass on the trade based on that.  However, if we remember that the market is a discounting mechanism, and that it looks forward about six months, we might have been inclined to play the breakout, and make a nice profit.

Six months from the November breakout (roughly) STX was up 100% off the August, 2004 low, and after the November, 2004 breakout, earnings improved as we went along.

Now, on August 25, 2005, STX gapped down to 17.60, below a H&S top on very nice trailing twelve month earnings.  At 17.60, the P/E ratio was only 12.84 basis TTM.  Just as we might have been inclined to pass on buying the Inverse Head & Shoulders breakout in November, 2004 because of the high P/E ratio, we're now inclined to BUY the Inverse H&S breakdown because of the low P/E. 

Hmm-mm...now, what did we say about the market being a discounting mechanism?  ???

1. STX has broken the neckline of a H&S top.
2. STX has  broken June, 2005 support at 17.04
3. STX has broken April, 2005 suppot at 16.422

All in only five sessions.

Just my opinion, but when the chart isn't playing out what the fundamentals are indicating (they appeared to be bad in November, 2004...the appear to be good in August, 2005), I defer to the chart. It's damaged, technically.

Watching the price action in STX this week, BTW, I'm now pretty convinced that the "dubious" Piper Jaffray upgrade on Monday was an attempt to distribute some STX stock on the one day rally back to the broken neckline that their "upgrade" generated.

Maybe I've become too cynical.  ;D 

Quote from: Melf Elf on September 01, 2005, 03:14:11 PM
This is one of those "counter-intuitive" things, but let's walk through it:

Scroll down and look at the Inverse H&S breakout in November, 2004.  At that time, trailing twelve month earnings were $0.24, so at the point of the upside breakout, STX was trading at a P/E of 60 basis TTM. 

That's a very high P/E, and we might have been inclined to pass on the trade based on that.  However, if we remember that the market is a discounting mechanism, and that it looks forward about six months, we might have been inclined to play the breakout, and make a nice profit.

Six months from the November breakout (roughly) STX was up 100% off the August, 2004 low, and after the November, 2004 breakout, earnings improved as we went along.

Now, on August 25, 2005, STX gapped down to 17.60, below a H&S top on very nice trailing twelve month earnings.  At 17.60, the P/E ratio was only 12.84 basis TTM.  Just as we might have been inclined to pass on buying the Inverse Head & Shoulders breakout in November, 2004 because of the high P/E ratio, we're now inclined to BUY the Inverse H&S breakdown because of the low P/E. 

Hmm-mm...now, what did we say about the market being a discounting mechanism?  ???

1. STX has broken the neckline of a H&S top.
2. STX has  broken June, 2005 support at 17.04
3. STX has broken April, 2005 suppot at 16.422

All in only five sessions.

Just my opinion, but when the chart isn't playing out what the fundamentals are indicating (they appeared to be bad in November, 2004...the appear to be good in August, 2005), I defer to the chart. It's damaged, technically.

Melf - Thanks for offering a totally different persepctive on this (applaud).

I'm used to looking at forward PE, Revenue Growth, Cash/Debt , etc. to form valuation.
I've never really understood TA - so this is indeed a learning experience.

QuoteWatching the price action in STX this week, BTW, I'm now pretty convinced that the "dubious" Piper Jaffray upgrade on Monday was an attempt to distribute some STX stock on thar one day rally back to the broken neckline that their "upgrade" generated.

Maybe I've become too cynical.  ;D 

I absolutely agree regarding manipulation by the Brokers and Market Makers.

I'm sure Piper Jaff, in some way was selling on the upgrade, just like they'll buy when they downgrade certain stocks.

I'm really glad to have found this site - It's great to hear the voice of reason or dissent with out someone insulting my Mother in the process (AKA Yahoo)

Good Trading to you Melf

Applauds from me as well - this is one of the best post I have seen on 3SOF.

Thanks for taking the time to put this together.

Scott and Mike,

Thanks.  STX still is tanking.  It filled the November, 2004 gap yesterday which one would expect after the gap down from the H&S top, so it could bounce here, but I don't like the sector weakness on what appear to be good fundamentals.

KOMG now has taken out and closed below its early September low (31.29), when Merrill Lynch upgraded it to $42.  KOMG closed yesterday at 30.98.  Next horizontal support is 30.27.

Hi Melf Elf and KCScott

Hmmm... I am probably a day or two too early but I bought Seagate today. The gap from November 2004 is almost closed and I decided not to wait for the last couple of percentages.

Fundamentally Komag and Seagate are both extremely cheap at these levels with the forecasted growth for both companies.

As said in the Komag threat I believe that the decrease in the price of HDD stock is due to a number of misunderstandings. Needham had an excellent write up:

QuoteDisk Drive Industry Update: Volume 27

The stocks in our HDD universe (along with broader technology companies) have been badly battered over the past several weeks/months. In our view, the rationale for the declines has been based at least in part on misconceptions, half-truths, and over-exaggerations. Over the years we have experienced numerous industry-wide declines that have triggered sell-offs in the stocks. Surprisingly, we believe this most recent destruction of capitalization is occurring in the absence of tangible data traditionally preceding a downturn (such as rising channel inventory, aggressive pricing declines, or weak end market demand). Some of the most frequent issues cited are described below.

Top 7 Myths About the Drive Industry Today

1. "Demise of the 1-inch HDD in the iPod Mini by flash is the Seventh Sign of the Apocalypse." Industry speculation about the arrival of larger capacity flash appearing in an iPod began earlier this year. In June, we wrote Volume 24, which outlined the potential impact to Seagate, as the second largest supplier to Apple for the 1-inch. Our conclusion, which has remained consistent to this day, was that the overall impact to Seagate was minimal and that the risk was more of the headline variety rather than financial. We had incorrectly assumed this was widely understood by the market. In fact, as recently as a few weeks ago, analysts were downgrading Seagate due to Apple's decision (despite making only minimal changes to the model). Apparently if data is old enough it can become new again. The bottom line is that the 1-inch space is a footnote compared to the broader drive market. Through 1H05, 1-inch shipments for the ENTIRE industry represented less than 5% of total drive volume. Recent forecast revisions from IDC following Apple's announcement reduced unit estimates by less than 3 million units for 2H05 (or less than 1% of total).

Not surprisingly, with gross margins only slightly better than mainstream desktop, the earnings impact is also less significant than the nearly $2.5 BILLION reduction in Seagate's market cap would suggest! Overall, while the 1-inch is interesting, the consumer opportunity is far more tied to the adoption of PVRs (high-capacity, high-cost, high-margin) than any other segment.

2. "With the drive industry in its fifth consecutive quarter of stability, it is due for a collapse." This investing approach also appears in other forms of daily life, such as standing before the roulette wheel and betting on red because black came up the last five times. Despite the recent declines in the stocks, the fundamentals do not support an impending downturn in the space. Wholesale build plan reductions, rising inventory levels, declining prices and margins...these are the signs of the end of a cycle. It is very difficult to have these conditions in the face of unmet demand, capacity constraints, historically low inventory (and falling), and comparatively benign pricing. Shouldn't the data drive the analysis? Overall, we believe that one should be a student of history, not a slave to it.

3. "The drive industry is on the verge of excess capacity." We strongly disagree with this view. In April 2005 we published the first research report to discuss the impending media shortage for the drive industry. Looking into 2006, we believe that even benign industry unit growth will continue to lead to supply tightness (if not continued shortages) throughout the year. So far, the industry has displayed great restraint with regard to capacity additions, taking more of an incremental approach. With media likely to remain a gating factor to drive shipments (and therefore the most critical capacity expansion spending to track) over the next 12-18 months, we do not see an opportunity for the traditional overbuilds that have plagued the industry historically.

4. "Perpendicular recording will crush component counts." We view this point more as a misunderstanding than anything else. Historically, the drive industry moved to new technologies in a wholesale way, usually in a compressed timeframe of sometimes just a couple of quarters. These new approaches enabled dramatically higher areal densities at a time when higher capacities were only achievable by utilizing higher component counts. So there is historical precedent for the view that perpendicular would increase capacities and lower components. However, the situation has changed somewhat. Perpendicular recording is likely to take longer and be more painful to implement than the street believes today. Therefore we believe that the industry is likely to deploy the technology first in select products where space constraints warrant a different density to increase capacities (namely the 1-inch, 2.5 inch mobile and enterprise). Desktop drives, still most popular at 80GB, are likely to be the last place to see the arrival of perpendicular (likely after 160GB which will be longitudinal) and not until late 2006/early 2007. Consequently, we expect platter counts, for example, to remain steady at 1.6-1.8 until that time.

5. "Flash is coming to notebooks. Drives are dead." The drive industry received a black eye in the press following the Apple Nano announcement on flash displacing hard drives. We expected a 4GB flash product eventually, but not until next year even with the tremendous price declines in the flash space. Underlying our belief was that flash participants actually wanted to MAKE money. Silly us. Emboldened by their pyrrhic victory, certain flash players are talking again about their Frankenstein 16GB flash product for the laptop market. We find this interesting since the much touted 4GB for the Nano is still a 2GB stacked despite a 4GB announcement last year. In any event, while it would be foolish to completely discount the possibility of flash storage in certain mobile devices, the reality is that both technologies are on virtually the same areal density curve as both use some of the same semiconductor equipment. Therefore, we believe there will be a continued price/GB advantage for drives for the foreseeable future.

And more near-term...

6. "The September quarter started slow for the drives. Repent for the end is near." Following Hutchinson's press release suggesting demand was slow early in the quarter, some investors believe that the September quarter started slowly. Our checks (and recent 8-Ks) do not corroborate this.

Historically, the month of September alone can account for 40-50% of the September quarter. The channel can be even more back-end loaded (as it seems to be this year) than other quarters. In our view, Hutchinson was more impacted by at least two customers holding suspension inventory at the end of last quarter and burning it off in the first part of this quarter. Yield issues were compounded by extra capacity, but the slowness experienced by the company was more likely tied to the inventory issue. This explains why no other players cited this slowness.

7. "The Enterprise market is weak, the TAM (total available market) and pricing are falling". Seagate mentioned in their most recent 8-K that the enterprise TAM would likely be less than their original expectations of flat sequentially (or 6.9 million units). We always cringe when companies attempt to estimate the TAM at the beginning of the quarter, as you are nearly guaranteed to be wrong one way or the other. Our data suggests that September is always a difficult time for the enterprise due to European summer vacations, making the TAM typically down slightly. In this case, we believe there are some Seagate issues that need to be understood. Specifically, our checks suggest that EMC, likely Seagate's second largest customer, purchased extra drives at the end of last quarter to support its recent launch of a high-end DMX storage system (perhaps as much as 150K drives). As Seagate is the largest supplier of drives to EMC, they would feel a disproportionate effect as that inventory is burned off. Additionally, Hitachi appears to be slowly crawling itself out of a self-created pit. We estimate units could increase slightly sequentially, but a true recovery could be a year away. Fujitsu also appears to have been suffering some manufacturing glitches that are likely to reduce their shipments sequentially. Maxtor should be flat. The aggregate of these data points suggests an enterprise market that is seasonal, not weak. Finally, industry discussions indicate that pricing is typical, but not aggressive.

Conclusion

We believe the HDD sector is experiencing an investor turnover as momentum-type investors, whether believing the above myths or not, vacate the space. Value-oriented accounts, meanwhile, appear to be waiting for the group to "bottom". We expect that information coming out of the October conference calls may provide enough insight to provide longer-term accounts with the visibility required to see the industry's upside potential. Until that time, we believe the group will be range bound. Our top picks, based on fundamentals and valuation, remain Seagate and Komag, with Hutchinson already near trough valuations and a solid long-term play.

and here is the chart:

Quote from: Michael on September 20, 2005, 10:36:21 AM
Hmmm... I am probably a day or two too early but I bought Seagate today. The gap from November 2004 is almost closed and I decided not to wait for the last couple of percentages.

Hi, Mike,

Actually, the November, 2004 gap at 14.99 is filled, and STX looks to be trying to make a stand here for at least a short-term rally.

Yesterday, it put in a potentially bullish Doji Star Hammer.  The low was 14.81.  Near the open today, STX went down and made a low at 14.84, above yesterday's low, then it rallied to 15.15, above yesterday's high of 15.10, so we've got a "higher low and a higher high."  I like that.

I just bought it at 15.10.  Stop: a close or obvious late day tank below 14.81.  Risk: 1.9%.
Thanks for the information.

Melf Elf - that was a very pleasant surprise  :o

It seems like the Stock Gury's also decided that today was a good entry level: http://www.forbes.com/investmentnewsletters/2005/09/20/seagate-wynn-invitrogen-cz_mr_0920gurupicks_inl.html?partner=yahootix.

We will soon be a little crowd - I am wondering where KCScott is  ???

I didn't expect Fed to raise today but STX reaction to the raise hopefully tells about the strength of this reversal.

Quote from: Michael on September 20, 2005, 03:43:36 PM

It seems like the Stock Gury's also decided that today was a good entry level: http://www.forbes.com/investmentnewsletters/2005/09/20/seagate-wynn-invitrogen-cz_mr_0920gurupicks_inl.html?partner=yahootix.

Thanks for the Forbes article, Mike.  I couldn't tell from the wording whether the gurus loaded up at higher prices, or loaded up just recently.  The P/E sure seems low.  Current fiscal year estimate is 2.00, I think, so STX is trading at a P/E of 7.5 basis those earnings.  That seems almost ridiculously low if STX meets the estimate. 

QuoteI didn't expect Fed to raise today but STX reaction to the raise hopefully tells about the strength of this reversal.

We got another Bullish Doji Star Hammer today.  STX printed 5.16, above the day's high of 5.15, right at the rate hike, then backed off, along with everything else.  I consider it a triumph of sorts that STX managed to close in the green.    ;)

I'd like to see a nice upside follow-thru day tomorrow.  A gap up at the open to 5.17...5.18, just  at or slightly above today's high of 5.17 would be nice, then some upside from there.   

Good luck, Mike! ;D

Quote from: Michael on September 20, 2005, 03:43:36 PM


We will soon be a little crowd - I am wondering where KCScott is  ???

I'm here, still watching from the sidelines (and licking my wounds from IDSA and maybe EYII - Yikes)

From a fundamental perspective this is a great value - I'm in the air to San Fran tomorrow early, so won't have a chance to watch the open. Looks like a lot of shares moved so I may have some time if it makes a break (the way my luck is going lately it will gap up 15%)  :P

Good luck - I'll try and get a look in when I land in SF

Well, didn't make it to SF, yet - They have this regular occurance called "Fog" that always means flights will be 1-2 hours later than planned. At least they have Wi-fi in Denver.

The whole market is down today on fears of hurricane Rita, and STX is staying put at 15 so I'd view that as bullish. I'm thinking there may be some churning around this level for a while so I'm gonna watch a little longer (and hopefully take some profits in some other positions before I commit)

---------

On a totally unrelated note, I saw a great new security Video product recently called shifrtwatch. The application for transit (trains, buses) etc. has huge potential in both public and private sector. The manufacturer is A4S Security - ticker symbol is SWAT. They just announced a collaboration with Sony today.

Fairly recent IPO - shares are at $5.50 with a total of only 1,200,000 shares. - This issue should fly under the radar for a while - But wanted to give you a "heads up" if your interested.

I took a flyer on 1,000 shares.

Good Luck -

Scott

Quote from: Melf Elf on September 20, 2005, 02:08:03 PM
I just bought it at 15.10. Stop: a close or obvious late day tank below 14.81. Risk: 1.9%.
Thanks for the information.

Sold it at 14.78.   Loss: 2.1%

I don't like the takeout of 14.81 after the two Bullish Doji Star Hammers... that now don't look so bullish.

Hi Melf Elf

That was a short pleasure  :-\

I understand your reasons for selling from a technical point of view. In fact after the last couple of days action I should probably sell 90% of my shares. Let me therefore ask you (and the rest of the TA gurus). Does it make any difference from a technical point of view whether a decline in a stock is due to company specific reasons or a general decline in the market as the one we have suffered the last couple of days.

From a fundamental point of view I believe it makes a big difference. Situations like this offers some excellent opportunities to buy value stocks like AOB, KOMG, CKCM, VPHM, STX etc. etc. etc. at a nice discount.

Mike

Quote from: Michael on September 22, 2005, 04:26:41 PM
Hi Melf Elf

That was a short pleasure  :-\

VERY short pleasure!  :-\  I'm glad that STX came back for you yesterday, Mike.

QuoteI understand your reasons for selling from a technical point of view. In fact after the last couple of days action I should probably sell 90% of my shares.

I know what you mean.  I've found the trading environment this summer to be very frustrating, particularly the false breakouts.

QuoteLet me therefore ask you (and the rest of the TA gurus). Does it make any difference from a technical point of view whether a decline in a stock is due to company specific reasons or a general decline in the market as the one we have suffered the last couple of days.

That's a great question, Mike, and it's difficult for me to answer.  For example, I thought that my STX trade had merit, based on the beating that it had taken, the two bullish-looking candlesticks, the good fundamentals, and the risk/reward.

However,  I knew that the KOMG chart looked lousy.  But, the WDC chart looked okay.   ???

The deciding factor for me in taking the trade was the low risk of 2%.  In other words, technicals and fundamentals aside, at that point, it was a business decision.  As Daniel (Rocket8) said on another thread, (paraphrasing), "Based on what you know, do you want to take the trade or not?"

QuoteFrom a fundamental point of view I believe it makes a big difference. Situations like this offers some excellent opportunities to buy value stocks like AOB, KOMG, CKCM, VPHM, STX etc. etc. etc. at a nice discount.

Hmm-mm...I guess that's where I like to see a marriage between the fundamentals and the technicals.  They seem to be divorced at the moment, in a number of cases.  :D

As good as the fundamentals have looked on KOMG, CKCM and STX, the charts have looked bearish, which is why I was cautious about trading STX.  A risk of 2% was okay with me, but those stocks have continued to come down.

I'll update the KOMG and CKCM charts in those files, Mike.

   

JMHO - I think the buying kicks in Monday - Rita damage much less than expected (although gas prices will jump in the AM due to loss of several refineries) - My guess would be some some of the growth stocks that have consolidated or flatlined since last Tuesday.

Scott,

On the weekly chart, STX put in a Bullish Hammer at the bottom of the Kumo (Cloud).  If it can close this week at least half way above the prior week's black candlestick, 15.61 or better, that would give us a 3-week pattern called a Bullish Morning Star, which is one of the most bullish bottoming patterns in the candlesticks.

If we get it, STX would have a good chance of rallying to the top of the Kumo (Cloud- vertical green lines) and the broken neckline of the H&S top (thick blue line), which are in the 17.70s-17.80s.

Quote from: Melf Elf on September 26, 2005, 07:37:29 AM
Scott,

On the weekly chart, STX put in a Bullish Hammer at the bottom of the Kumo (Cloud).  If it can close this week at least half way above the prior week's black candlestick, 15.61 or better, that would give us a 3-week pattern called a Bullish Morning Star, which is one of the most bullish bottoming patterns in the candlesticks.

Scott,

It's the end of the week, and STX just printed 15.61.  We'll see how it closes.

Hold all betting tickets  ;D

Yesterday, Needham cut its target on STX from $28 to $21.  Today, JP Morgan downgraded STX and MXO.

Back when STX broke below the H&S top in August, we discussed how "the news is always best at the top," and how the market is a discounting mechanism.  If support breaks, often you find out why later on.

When the H&S top broke, Piper Jaffray lower their target from $27 - $25.  They still liked the stock, though.  $25 wouldn't be bad!  Yesterday, Needham lowered their price target from $28 to $21, but they still like the stock, too.

Today, JPMorgan downgraded STX.  But, they still like the stock, too!   ???

STX is trading at 14.85, flirting with its recent low.  If STX is worth anywhere near the  $21.00, shouldn't JP Morgan be upgrading STX?   ???

This is why I like to watch the charts.  Some of these guys wouldn't say SELL IT if they had a mouthful.  Instead, they keep ratcheting their targets down....down...down.

I will say, though, that when STX broke the H&S top, this lowering of expectations and targets is what I expected.  The old stock market saw: "First the chart...then the news," meaning first the chart breaks down, then later on (like now) you find out that targets are getting lowered, expectations are reduced, etc.

We'll watch for STX to stabliize.  If it's going even to the reduced $21 target that Needham has on it, that wouldn't be a bad gain from here.  Over 40%.

6:03am 10/13/05 

Seagate Tech cut at J.P Morgan on industry view (STX) By Aude Lagorce

LONDON (MarketWatch) -- J.P. Morgan cut hard disk drive maker Seagate Technology Corp (STX) to neutral from overweight, citing its more somber stance on the industry economics for the next few quarters. Still, the broker told clients it continues to believe Seagate is the best positioned disk drive maker, particularly given its lead in next-generation technology investments, vertical integration and broad product set.

Hi Melf Elf

You are right once again! You most make a killing in this market  :o

Today is a interesting day in the HDD market. KOMG who is a supplier to the HDD producers is upgrading due to strong demand freom their customers and the stock increases 3.5%. Seagate who is one of the customers falls 3.5% because J.P. Morgan is concerned that growth will lag historical demand in the December quarter.

So the company supplying the HDD producers are upgrading because of strong demand and the analysts is downgrading the HDD producers.

Well I am probably an idiot but i actually believe the company supplying Seagate more than the JPM analyst.

But as you would say the chart tells the truth and you are almost right. The chart reflects what the analysts tells their customers and how the customers reacts to the recommendations but is that the truth?

I don't think so but as said if you by reading the chart can get insight to the analysts upcoming recommendations you might make a nice profit but if you can forecast the acutal earnings of the company you might do even better  ;)

Mike,

The timing of these downgrades in STX sure is interesting.   

Chartwise, I don't see that we have anything nearly as convincing as when I rated the August 29 Piper Jafray upgrade as  a STRONG SELL, which I think was my first post in this folder. 

That upgrade came the day after we completed the big H&S top, and I viewed it as a thinly veiled attempt on Piper Jaffray's part to manipulate the stock higher so that they could dump it.

But, I'll tell you what we do have in STX at these two analyst downgrades: a double bottom  at 14.49 and 14.50, right at the level where STX broke out of an Inverse H&S pattern last November.  The neckline was 14.59 - 14.50. 

"Former resistance should serve as support," and as the chart stands tonight, we've got a successful  double re-test the 14.50 support area, and we have two analysts DOWNGRADING the stock.

Hmmm-mm...

We're also at a juncture in the market where it's tough to find many who like it, including myself  :D

Hmmm-mm...

I really, really don't want to buy this stock tomorrow, Mike, even if it did just have TWO successful tests of 14.50 support.

Hmmm-mm...

I HATE THE MARKET RIGHT NOW!!   >:D  >:D  >:D 

Hmmm-mm....



 

Quote from: Melf Elf on September 30, 2005, 09:50:48 AM
[Scott,

On the weekly chart, STX put in a Bullish Hammer at the bottom of the Kumo (Cloud).  If it can close this week at least half way above the prior week's black candlestick, 15.61 or better, that would give us a 3-week pattern called a Bullish Morning Star, which is one of the most bullish bottoming patterns in the candlesticks.

STX did end up putting in the 3-week Bullish Morning Star pattern that week.  The close was 15.85.

STX didn't make much upside progress from there, though.  It got stopped at first resistance, the Tenkan-Sen (Green line), on the Ichimoku Kinko Hyo chart.  The rally high was 16.51.

Interestingly, if STX has put in a double bottom at 14.49-14.50 and can take out that 16.51 high, the target, for the "W"-bottom breakout measures to TRIPLE resistance:

1. The broken neckline of the H&S top (Blue line)
2. The Kijun-Sen (Red line)
3. The Top of the Kumo, or Cloud (vertical lines)

Math:

16.51 high - 14.50 low (I use the more conservative number) = 2.01 points

2.01 points added to a breakout above 16.51 = Target: 18.52

The top of the Kumo (Cloud) currently is 18.40. 
NOTE: In counter-trend rallies, its common to fall short of targets.

Given how bearish the market has looked lately, I'm wanting to consider bullish possiblites.   ;D

Quote from: Melf Elf on October 14, 2005, 02:50:57 AM
We're also at a juncture in the market where it's tough to find many who like it, including myself  :D

Hmmm-mm...

I really, really don't want to buy this stock tomorrow, Mike, even if it did just have TWO successful tests of 14.50 support.

Hmmm-mm...

I HATE THE MARKET RIGHT NOW!!   >:D  >:D  >:D 

Hmmm-mm....

I was tempted to buy the 14.49-14.50 double bottom, and it would have worked out okay for a quick trade on the relief rally, but this chart, and the market in general, has looked so lousy, I passed on the trade.

STX rallied only for two days, never got near next resistance at the trendline, then came right back down and broke the double bottom on Wednesday, and closed below the double bottom yesterday.  Ugh.

Still acting bearish.

Hi Melf Elf,

TA and FA is all about predicting the future price of a stock.

STX has become the test between the prediction power of TA and FA (at least between the two of us ;))so let me challenge you:

From a fundamental point of view the perfect time to buy this stock is in the start or middle December (and this has nothing to do with earnings as Seagate has already proven their earnings power!) I will bet that the chart will show a break out by end of December start of January and those people who bought before that will do better than those who reacts on the TA signal. (that includes those who are in the stock today)

Are you game?

I am sorry if I am a bit cocky but until now this earning season has been excellent for the FA's on this board!

Mike

Seagate is up over 25% over the last month despite several downgrades from major analysts.

As said before in this thread these downgrades have (IMHO) nothing to do with the fundamentals of the company but everything to do with New SAC's distribution of Seagate shares. (You see these shares can't be sold in the open market for 12-month)

Try to have a look on Bear Sterns recent downgrade:

QuoteThe company operates in a highly competitive industry fueled by price aggression, oversupply, and excess capacity, and its operating results depend on strong execution to maintain overall quality, competitive cost structure, adequate supply, product qualifications with customers, and technological parity with its competitors.

Seagate could lose market share rapidly if any of its competitors can outperform the company in any of the above metrics. If the company is not able to align its cost structure to ASP declines in the industry, then its results could suffer.

Unexpected volatility in PC, server, and storage demand could hurt the company's pricing and margin structure.

Unexpected technology advances by its competitors could also hurt the operating results of the company.

Yeah:

• the company could loss marketshare
• the result will suffer if it can't adjust its cost structure
• unexpected volatlity could hurt the result
• unexpected technology advances by it competitors could hurt the result

I almost feel sorry for BS. They are really struggling to justify this downgrade. There must be a lot of money in it for them! It becomes almost hilarious when it comes to the price target:

QuoteValuation: Fair Value of $10-$13.

As for valuation, while the stock is currently trading at P/S multiple of 0.9x on our CY06 estimate, it could trade down to historical median multiple of 0.6x-0.8x (or fair value of $10-$13, lowered from $22-$24 based on a P/E multiple of 11x-12x).

Given the highly cyclical nature of the drive industry and potential for significant earnings contraction, we have switched our valuation methodology from P/E basis to P/S basis and view 0.6x-0.8x P/S appropriate given the weakening industry dynamics since it is the historical median for the stock

To justify the new valuation they had to change the criteria from P/E based to P/S. I guess that nobody would take them serious if they wrote that they based their valuation of a P/E around 5 on their own earning forecast!

The chart below shows the P/E ratio for this year:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=10205;image)

As can be seen STX traded with a P/E between 25 to 30 until the downgrades started.

The valuation now is ridiculous. Seagate trades with a 100% to 200% discount to each peers:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=10207;image)

You would expect that this kind of discounts would be because they are not performing or because the industry is facing difficulties in the future but nothing could be further from the truth.

Seagate is a clear leader in their industry. They have been profitable every year since 2002 and the revenue is growing fast:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=10206;image)

As to the industry it is struggling to meet demand. (See the Komag thread). A recent survey among HDD distributors indicates that demand will increase in Q1 2006 (this is against a normal slowdown in q1): http://www.infostor.com/Articles/Article_Display.cfm?Section=ARTCL&SubSection=Display&PUBLICATION_ID=23&ARTICLE_ID=242149

Let me quote:

QuoteIn responding to a question regarding the Q4 2005/Q1 20006 outlook, 62% of the survey participants said they were "on plan" in terms of revenues, 38% were "above plan," and none of the survey participants were "below plan" in Q4. And 38% anticipated 5%+ sequential growth in Q1, while 62% anticipate flat revenues. This is in contrast to the more-typical pattern of revenue declines in the first quarter.

and it continues:

QuoteOverall, HDD pricing is relatively stable, according to 88% of the Baird survey respondents, despite some aggressive price-cutting on enterprise-level SCSI drives over the last few weeks. But most distributors expect pricing to be stable in 2006, in part due to constrained supply, and 67% of the distributors say that HDD pricing is "more rational" now than it was a year ago.

Well it doesn't seem to me like an industry that are facing a slow down in demand. This is hardly surprising with the explosion in the need for HDD due to music and video downloads and new consumer devices. In fact exactly the same analysts that are downgrading STX expect earnings to increase next year. (http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=4982)

But enough about the fundamentals. As said a couple of days ago STX's stock price has nothing to do with the fundamentals.

The real question is when the Bear Sterns, JP Morgan, Goldman Sachs and Morgan Stanley are finished buying the restricted shares and decides to take the stock up again.

Well the last shares are being distributed in January. (25 million) and the banks can start selling the shares in May 2006.

My feeling is that we will see the stock price taking off in December (as more and more private investors are becoming aware of this scam) and the upgrades from the analysts will come after the release of Q4. 2006 should be a fantastic year for Seagate investors.

So I am going to buy more STX at any weakness in the coming month.

Mike

Good pick Michael ;) i'll be looking into this...(APP..)

Hi Terlisa

Not sure what APP means but I am looking forward to the result of your DD  ;)

It is interesting to see that Institutions and Mutual Funds own 105% of the float of STX. One of the investors that recently has increased his holdings is David E. Shaw, known as the Bill Gates of computer finance. He increased his position with 280% according to the latest reporting.

Another interesting development which has not received much coverage is the continuation of the stock repurchase program to the tune of $400 million (hidden in an 8K on Wednesday)

Writing this post I looked through the thread and found this post which formed part of the TA/FA discussion.

Quote from: Michael on September 22, 2005, 04:26:41 PM
Situations like this offers some excellent opportunities to buy value stocks like AOB, KOMG, CKCM, VPHM, STX etc. etc. etc. at a nice discount.

All these stock are up today with an average of 19%. Not a bad return over 2 month. I am still holding every single one and still believe they have a long way to go before they are fairly valuated!

Mike

fyi:
STX: Susquehanna Starts @ Positive; Analyst Notes
Friday , November 18, 2005 09:23 ET
Issuer: Seagate Technology (NYSE: STX)
Analyst Firm:  Susquehanna
Ratings Action: INITIATE
Current Rating: Positive
Analyst Comments: The firm believes expectations are achievable and valuation is attractive especially in the 2H06 timeframe as products incorporating perpendicular recording technology ramp.

&
STX: Short Interest UP 11.0% to 7.7M in Nov 2005
Monday , November 21, 2005 16:24 ET

According to new short interest data from NYSE, short interest for Seagate Technology (NYSE: STX) INCREASED 11.0% to 7,655,624 shares for the month ended mid-November, 2005.

SYMBOL     OCTOBER        NOVEMBER          CHANGE    %CHANGE     DAYS/COVER
--------   -------------   -------------   -------------  ------------  ----------
STX            6,893,997       7,655,624        +761,627       +11.05%           2

Based on STX's 20-day average daily share volume of 3,863,510, it would require approximately 2 day(s) of buying to cover this short interest.

Quote from: Michael on November 27, 2005, 07:49:59 AM

Not sure what APP means but I am looking forward to the result of your DD  ;)!

Mike

Michael, "APP" means APPLAUD (I just made it short) ;)
Applauded you for the STX posts you've made...  ;) goodluck my friend

Terlisa

I was wondering why my Applaud rating went up  ;)

Thanks a lot and good luck with your investment as well. I am following your posts and I am sure we will find a stock we both like one day!

Mike

Applause Mike and thank you for these great picks.  I bought KoMG today and will probalby establish a position in STX soon.

It seems like the upgrades are coming in from left right and center now  :D

This is a bit earlier than I had expected but I guess that the positive earnings outlook released Thursday made the artificial downgrades look even more ridiculous than when they were issued (if possible).

Here is what Bear Sterns now have to say about Seagate and the HDD market:

QuoteIn a research report, Bear Stearns long-time computer hardware analyst Andrew Neff said he raised his investment rating on shares of Maxtor Corp. (MXO), Western Digital Corp. (WDC), Seagate Technology (STX) and Komag Inc. (KMG) to peer perform from underperform because of strong demand for desktop and notebook computers, low inventory for hard disk drives and a improved pricing environment.

"HDD industry conditions are clearly strengthening," wrote Neff in a research report. "While we note that the sector is highly volatile, the last 2-3 data points have been positive." Neff was referring to Western Digital and Seagate, both of which raised their financial targets for the December quarter.

Here is the problem. The HDD market never weakened. This whole story about weakening demand was created by Bear Sterns, J P Morgan, Goldman Sacks and Morgan Stanley to support their own agenda as discussed previously in this thread.

All these firms seem to have agreed to upgrade the stock to neutral. So there are still room for upgrades after the release of the December earnings.

By the way this whole issue is now so obvious that even Cramer has realized it:

QuoteSeagate Technology raised guidance Thursday by about 10% for the quarter, Cramer said, and the stock was up only about $1. Today it was down 46 cents. "That's not right," said Cramer.

I couldn't have said it better. That is not right and as usual when the market is wrong there are money to be made!

Let me finished with the chart. I hope I am not the only one who have bought a ticket for this journey to the north (http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=3311;image)

fyi  ;)

STX: Deutsche Bank Ups to Buy from Hold; Sets Tgt @ $24; Analyst Notes
Thursday , December 01, 2005 09:52 ET
Issuer: Seagate Technology (NYSE: STX)
Analyst Firm:  Deutsche Bank
Ratings Action: UPGRADE
Current Rating: Buy (from Hold)
Target Price: $24.00
Analyst Comments: The firm notes multiple should expand, as the company's new product lines should be met with strong demand.
&
STX: Bear Stearns Ups to Peer Perform from Underperform; Analyst Notes
Friday , December 02, 2005 07:42 ET
Issuer: Seagate Technology (NYSE: STX)
Analyst Firm:  Bear Stearns Cos.
Ratings Action: UPGRADE
Current Rating: Peer Perform (from Underperform)
Analyst Comments: The firm upgraded the stock based on stronger PC demand, low channel inventories, benign pricing, and tight supply.

When I get older loosing my hair many years from now......

Well maybe not so many years from now but I will always remember when KCScott said that Seagate's needed TA. Hell No it just needed some common sense.

You have a clear industry leader in an industry that is growing very fast who generates a lot of cash and is trading at a PE around 11. (TTM - forward PE is even more interesting)

Seagate has just announced that it will buy Maxtor at a premium of 60% and guess what the stock is up. This deal obviously makes a lot of sense but it also demonstrates how undervalued all the HDD shares are.

The analysts have notoriously been embarrassing wrong on HDD stocks. Yesterday we had one of the experts trying to talk down KOMG. Really a bit silly to be honest but I am sure he had his reasons.

Just hours after the take over of Maxtor Seagate confirmed their commitment to KOMG. It might be surprising that they in the middle of a take over have time to talk about one of their suppliers but for us who have taken the time to understand this industry this shouldn't come as a surprise. After all KOMG is key to the success of Seagate and this just confirms how strong a market position KOMG has.

Let me finish this with a quote from William Watkins, the chief executive of Seagate Technology from Forbes today:

QuoteEverything is being disruptive and disrupted," he says. "Disk drives have been a $20 billion market for five years. All of a sudden you're going to see phenomenal growth--an extra $10 billion to $15 billion.

No wonder you have a chart like this:

Logocovet asked in the KOMG thread whether it was too late to join the Seagate party.

Well it has been a hell of a run since November but this should be seen in perspective. In November the whole world thought that the Hard Disk industry was taking it last breath. Three month later it seems like this is the hottest industry to be in! I am still trying to figure out what has changed (http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=4982)

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=13471;image)

In November Seagate really was a no-brainer. The picture is more complex now. Seagate has offered to buy Maxtor. As mentioned earlier I believe that the take over makes a lot of sense:

• They now becomes a clear number one in the HDD space
• They can squeeze a lot of synergies out of the merger
• Their cost base has the potential to be the lowest in the industry
• The market becomes less competitive with the consolidation and capacity adjustments are easier with fewer players.

On the downside you might see some customers who previously was buying from both Maxtor and Seagate diversify to another supllier.

All in all STX expects the merger to add 10 to 20% to their earnings – a figure that some analysts say is conservative.

Number two HDD producer Western Digital is trading at a PE of 20 whereas STX is trading at 13. That doesn't make a lot of sense to me. Seagate is market leader, technology leader and they are growing revenue faster than Western Digital.  I really can't find any reason for the discount so a conservative target would be $36 or 50% higher than the Friday close.

Timing is not my strongest discipline (even though I got it pretty right with Seagate!)  but when I see this kind of valuation I simply buy the stock. When that is said it seems like the stock is a bit overbought right now so you might prefer to wait. Any analyst downgrade or other silly comments should be an excellent entry point!

Mike

analyst coments:

STX: US Bancorp Cuts to Mkt Perform from Outperform; Analyst Notes
Wednesday, January 11, 2006 08:10 ET
Issuer: Seagate Technology (NYSE: STX)
Analyst Firm:  U.S. Bancorp Piper Jaffray
Ratings Action: DOWNGRADE
Current Rating: Mkt Perform (from Outperform)
Analyst Comments: The firm believes STX's valuation reflects the demand outlook for PCs and consumer devices.

&

STX: Kaufman Bro Starts @ Buy; Sets Tgt @ $25; Analyst Notes
Thursday , January 12, 2006 09:17 ET
Issuer: Seagate Technology (NYSE: STX)
Analyst Firm:  Kaufman Brothers L.P.
Ratings Action: INITIATE
Current Rating: Buy
Target Price Action: INITIATE
Target Price: $25.00
Analyst Comments: The firm's channel checks support better HDD pricing and lower levels of channel inventory.

&

STX: Goldman Sachs Ups to Outperform from In-Line; Sets Tgt @ $30; Analyst Notes
Friday , January 13, 2006 08:28 ET
Issuer: Seagate Technology (NYSE: STX)
Analyst Firm:  Goldman Sachs & Co.
Ratings Action: UPGRADE
Current Rating: Outperform (from In-Line)
Target Price: $30.00
Analyst Comments: The firm has raised estimates substantially above consensus and sees further upside.

CC:
Seagate to Report Fiscal Second Quarter 2006 Financial Results on January 18, 2006
Monday , January 09, 2006 19:17 ET
SCOTTS VALLEY, Calif., Jan 09, 2006 /PRNewswire-FirstCall via COMTEX/ -- Seagate Technology (NYSE: STX) will report fiscal second quarter 2006 financial results on Wednesday, January 18, 2006, after the close of the NYSE market. A subsequent conference call for the investment community will take place that day at 2:00 p.m. Pacific Time.

The conference call can be accessed online at www.seagate.com or by telephone as follows:

USA: (877) 223-6202
International: (706) 679-3742

Replay
A replay will be available beginning January 18 at 5 p.m. Pacific Time through January 25 at 8:59 p.m. Pacific Time. The replay can be accessed from www.seagate.com/newsinfo/invest or by telephone as follows:
USA: (800) 642-1687
International: (706) 645-9291
Conference ID: 4075738

insider trading:
http://www.secform4.com/insider/showhistory.php?cik=stx

Hi Oliver,

Thanks for the info on the Analyst ratings. As they have got their ratings totally wrong for some time I don't pay too much attention to them.

An exception might be Goldman Sachs. They are one of the main shareholders of New SAC and also a big shareholder of STX directly (They increase their holding with 116% in Q3 - can't wait to see the Q4 13F!!!).

I do think Goldman Sachs have their own agenda but at least they should have the inside track being part of the shareholder agreement between New SAC and STX. Here are some additional information on their upgrade:

QuoteShares of Seagate Technologies (STX), a leading maker of hard-disk drives for PCs as well as consumer electronics, surged 5% on Friday following a bullish outlook from Goldman Sachs analyst Laura Conigliaro. She says the company's profits will likely be much stronger this year than the Street is expecting.

Conigliaro upgraded the stock to "outperform" and now lists it as one of her top picks for the year (along with EMC Corp., Hewlett-Packard and IBM). What makes the stock appealing, she says in a research note, is that analysts are underestimating the company's potential, and the shares are trading at a compelling price. "We see the prospect of substantially rising earnings estimates as a powerful driver for Seagate's shares," she says.

Conigliaro thinks Seagate will be able to earn $2.05 per share in calendar 2006, compared with the consensus estimate of $1.80, according to Thomson First Call. And she says that even her estimate may be too low.

Conigliaro expects tech spending by both consumers and businesses to pick up a bit this year, which would benefit technology-hardware companies as a group. She expects Seagate will enjoy strong sales volumes, as well as stable pricing for its products. That's notable because tough competition continually puts pressure on disk-drive makers to sell their products cheap. Better pricing should lead to better margins, she says.

Conigliaro notes that the company is broadening its offerings of disk drives for consumer electronics -- generally viewed as a promising area for growth. The firm's drives are included in everything from digital music players to video game consoles. She says notebooks and consumer electronics both "offer major share-gaining possibilities" for Seagate. And she says its desktop business should enjoy share gains or improved profitability as well.

Seagate announced in December that it plans to acquire disk-drive maker Maxtor Corp. Conigliaro says the company's post-merger forecast doesn't appear positive enough. She says that although combined company will likely lose some of its market share once the deal is completed, losses will be limited, considering Seagate's technology advantages and the fact that there aren't that many other companies to which customers can turn.

At $24, the stock trades at 13 times the consensus calendar 2006 earnings estimate. Conigliaro thinks the shares are worth $30.

Let me just be honest. I tend to like analysts more when they support my opinion  ;D

today reported record quarterly revenue of $2.3 billion, net income of $287 million, and diluted earnings per share of $0.57 for the quarter ended December 30, 2005. Included in these results are expenses of $20 million for non-cash stock based compensation and a $6 million one-time charge associated with a licensing arrangement Seagate entered into during the quarter. These results compare to revenue of $1.85 billion, net income of $144 million and diluted earnings per share of $0.29 in the year-ago quarter. The year-ago results did not reflect costs associated with non-cash stock based compensation.

For the March quarter, Seagate expects to report revenue of approximately $2.25 billion, and diluted earnings per share of approximately $0.55, excluding expenses associated with non-cash stock based compensation. Non-cash stock based compensation is expected to be approximately $21 million or $0.04 per share, equating to GAAP earnings per share of approximately $0.51.

For fiscal year 2006, Seagate now expects to report earnings per share in the range of $2.20 - $2.25, excluding charges for non-cash stock based compensation. Charges for non-cash stock based compensation are expected to be approximately $0.16 per share, which equates to GAAP diluted earnings per share in the range of $2.04 - $2.09. This compares to Seagate's previously stated fiscal year guidance of approximately $2.00 per share or approximately $1.84 per share when including charges for non-cash stock based compensation. The annual outlook incorporates a 5% tax rate during the March and June quarters.

The company has declared a quarterly cash distribution of $0.08 per share to be paid on or before February 17, 2006 to all common shareholders of record as of February 3, 2006.

Hi qma

I am not sure what 3SOF member consider to be a great stock but STX certainly fit my description!

• 25% revenue growth
• 100% increase in net income
• raised guidance for 2006
• a forward PE of 12

Tomorrow will be another great day for Seagate (IMHO).

Mike

STX: Matrix Ups to Strong Buy from Buy; Analyst Notes
Thursday , February 09, 2006 09:18 ET

Issuer: Seagate Technology (NYSE: STX)

Analyst Firm:  Matrix

Ratings Action: UPGRADE

Current Rating: Strong Buy (from Buy)


Analyst Comments: The firm believes the recent pullback provides an opportunity given strong desktop demand.

This rating information was reported by TheFlyOnTheWall.

It has been an amazing run for STX. We have gone from 14 to 27.4 almost without rest:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=15433;image)

But the most amazing thing is that even after this double KCScott's headline is still as valid as it was 6 month ago. STX is still undervalued and what stock doesn't need TA  ;)

STX is trading at a PE of 12.8 compared to an industry average of 30.4 and a price/cash flow of 8.6. The following chart is from Morningstar and does not include December quarter hence the higher PE (STX profit doubled in Q2 and they guided up).

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=15434;image)

With the consolidation of the industry and the aggressive targeting of consumer goods including mobile phones with the 1 inch HDD the industry is in a strong growth period.

Western Digital is trading at a PE of 19 and is growing slower than STX. From a fundamental point of view STX as the market leader should have a PE above 20 or a PPS of at least 43.

From a TA point of view we made a 52-week high yesterday and today on reasonable good volume and MACD has just turned positive. RSI indicates that we are entering overbought territory. We have been there before for extended periods so I am not too alarmed about that. I am not a great technical trader but for me the chart looks good.

And I almost forgot my favorite topic the poor short community. They made the unfortunate decision to short 12 million shares (give and take a few) on December 21st when the Maxtor merger were announced. Guess what the market loved the merger and these guys are now in the red with 98 million USD. The total short position is 22.8 million shares and a a very rough calculation says that they have lost at least 250 million USD.

The question is how long time they will sit and see STX make new highs before we start seeing some serious short covering. Streetwalker picked STX as one out of 5 short squeeze plays: http://www.forbes.com/2006/02/13/streetwalker-stocks-investing-cz_jr_0214streetwalker7.html?partner=yahootix

Buy STX due to the excellent fundamentals. A short squeeze will just make them reach the target faster.

Mike

awesome pick Mike, unfortunately no money left to invest!
your price target?

cheers
Oliver

STX: $0.08 Cash Dividend Payable Today
Friday , February 17, 2006 07:00 ET

According to the NYSE Corp Action List, today is the expected Payment Date for the $0.08 cash dividend previously declared for Seagate Technology (NYSE: STX).

  DECL-DATE          X-DATE        REC-DATE        PAY-DATE
-----------     -----------     -----------     -----------
01/18/2006      02/01/2006      02/03/2006      02/17/2006

AMOUNT:    $0.08 cash (USD)
FREQUENCY: QUARTERLY (based on history)
CHANGE:    CONTINUATION of regular dividend

&

SSeagate and Maxtor Announce Expiration of Hart-Scott-Rodino Waiting Period for Proposed Acquisition
Tuesday , February 14, 2006 07:01 ET

Feb 14, 2006 /PRNewswire via COMTEX/ -- SCOTTS VALLEY, Calif. and MILPITAS, Calif., Feb. 14 /PRNewswire-FirstCall/ -- Seagate Technology (NYSE: STX) and Maxtor Corporation (NYSE: MXO) today announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, with respect to the proposed acquisition of Maxtor by Seagate, has expired. As a result, no further anti-trust regulatory review of the merger will be necessary in the United States. As previously announced, the transaction is subject to other customary closing conditions and regulatory approvals by the competition review authorities of the European Union and several other jurisdictions as well as authorization by shareholders of both companies. Both parties continue to expect the transaction to close during the second half of 2006, following approval from shareholders of both companies and the satisfaction of all other closing conditions.

The ex-Dividend Date is 02/01/2006, so you need to be in before that day to receive $0.08/share dividend. The money has not distributed yet, but should be in sometime nextweek.

The greenlight for the STX/MXO merge is significant, which really ensure the leadership of STX on the storage market. Expect to pay more for the PC hard disk. |o|

 

fyi:

STX: Short Interest UP 7.4% to 24.5M in Feb 2006
Wednesday, February 22, 2006 17:56 ET

According to new short interest data from NYSE, short interest for Seagate Technology (NYSE: STX) INCREASED 7.4% to 24,496,667 shares for the month ended mid-February, 2006.

SYMBOL     JANUARY        FEBRUARY          CHANGE       %CHANGE      DAYS/COVER
--------   -------------   -------------   -------------  ------------  ----------
STX           22,800,291      24,496,667      +1,696,376        +7.44%           4

Based on STX's 20-day average daily share volume of 6,604,060, it would require approximately 4 day(s) of buying to cover this short interest.

Hi Oliver,

What a shame you don't have money for the ticket to this journey but at least you are on board on the KOMG travel (http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=3069)

We made a new 52 week high yesterday:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=16587;image)

As with KOMG this is a very simple pick. 4 month ago most analysts expected that the Hard Disk Industry would go out of fashion and that the HDD companies would suffer as a consequence. In fact this whole thread started because STX probably was one of the most depressed charts out there!

The analysts were bloody wrong and now they are stumbling over each other to correct the mistake. From being a sector out of fashion it has suddently become a sector that everybody wants to be in.

I posted an article from TrendFOCUS Report yesterday in the KOMG thread: HDD Industry Gets Even Hotter in 2006: http://www.3stocksonfire.org/trading/index.php?topic=2545.msg49461#msg49461

Here is a an article from Investor Business Daily:

QuoteMore Storage In More Places
BY BRIAN DEAGON

INVESTOR'S BUSINESS DAILY

Posted 3/3/2006

The once unglamorous field of computer storage is back in fashion.

Facing a range of pressures, chief information officers are scrambling to improve the way they store information. And that's brought a windfall to makers of disk drives and other storage gear.

The current frenzy began in the wake of 9-11. As plumes of dust and smoke smothered the lower Manhattan skyline after the World Trade Center attack, sheets of paper fluttered down like feathers. That spotlighted the vulnerabilities of companies' data.

Fortunately for many firms hit by the attack, essential information had been copied onto computers elsewhere the night before.

But the event helped raise awareness about the need for secondary backup storage.

Legislation enacted by Congress the past few years also helped spur the storage industry.

New rules, such as the Sarbanes-Oxley Act of 2002, require companies to retain more of their data. That necessitates more storage.

Also, information in general is being created at an unprecedented rate.

The world is becoming digitized. That includes the digitization of pictures and video, which eat up lots of disk drive space.

These trends help explain why companies like EMC (EMC) shipped more storage capacity in 2005 than during the entire period between 2000 and 2003. EMC makes industrial strength storage systems crammed full of disk drives. Companies use them to store and network their data.

In 2005, EMC sales rose 17.4% to $9.7 billion. Earnings rose 27%.

"In the last five years, we've seen 60% to 70% growth in the amount of data companies store on disk systems," said Howard Elias, EMC executive vice president of corporate marketing.

A shift to doing business at all hours also has helped drive storage sales. "It's a 7-by-24 world," Elias said. "Customers demand that information be available all the time. They don't want to wait."

1. Business

The storage industry is comprised of several distinct businesses. First are the disk drives — made by seven major players, including Seagate Technology, (STX) Western Digital (WDC) and Hitachi's (HIT) Global Storage unit.

EMC, Hitachi Data Systems, Hewlett-Packard (HPQ) and IBM (IBM) use those drives in their big storage systems. The refrigerator-sized systems store, on average, 20 terabytes of data. One large company might have dozens of them. One terabyte is 1,000 gigabytes, the information equivalent of 1,000 pickup trucks filled with books.

A subset to this type of storage is smaller storage systems, which are usually deployed in departments. Network Appliance (NTAP) and EMC ( EMC) are leaders in this field.

Storage software also is vital to the industry. It helps storage systems manage data and tie into the rest of the network. Software, in fact, is the fastest-growing segment of the storage market — and it's where acquisition activity is the most intense.

Another industry segment: providers of tape drives and tape storage systems. The two leading companies in this field are Imation (IMN) and StorageTek, which was acquired by Sun Microsystems (SUNW) last year for $4 billion.

In terms of storage per dollar, tape systems offer the best value. But they are slower than disk-based systems.

Hence, companies tend to put their most vital data on disk storage. They then move the information over to tape as it ages and needs to be accessed less frequently.

Then there are the industry's equipment suppliers. Disk drives are finely tuned and highly engineered products that include disk platters and recording heads.

Suppliers in this market include Komag (KOMG) and Hutchinson Technology. (HTCH)

The data storage industry has suffered through severe boom-and-bust cycles. And the number of industry players has fallen sharply since the 1980s, when more than 130 companies duked it out.

Most crashed or merged, leading to the seven survivors.

Industry consolidation has brought stability, but the race to develop new products and speed them to market is as intense as ever.

Name Of The Game: With a handful of giants fighting for a slice of the market, there's little room for delays or mistakes. The industry moves at light speed, so falling behind on a product cycle can wreak a devastating blow.

2. Market

Businesses have put a big emphasis on beefing up their storage capacity. They're also looking for better ways to manage data to improve efficiency.

That's been great news for storage makers, who are ringing up record sales.

U.S. factory sales of disk storage systems grew 18% to $4.7 billion in the fourth quarter. Worldwide, sales rose 13% to $6.8 billion, according to International Data Corp.

Seagate estimates that the industry shipped 380 million disk drives last year. All together, those drives had 35 million terabytes of capacity, up 60% from the previous year.

The most exciting area for growth comes from the consumer electronics field, where new applications are constantly emerging.

Disk drive companies are doing a brisk business selling drives to makers of digital video recorders, such as TiVo. (TIVO) Apple Computer's (AAPL) iPod also uses disk drives.

And digital cameras, cell phones and cars hold big potential for the disk drive industry.

"We're devoting a great deal of financial resources to drives for consumer electronics," said Dirk Thomas, a vice president at Hitachi Global Storage Technologies.

3. Climate

Aside from pushing fast into the consumer electronics market, the data storage industry has its sights on an emerging concept called virtualization.

It represents a fundamental shift in how information is managed at the corporate level.

The idea is to create several virtual computers within one computer. Or, conversely, several computers can be stitched together to create one giant supercomputer. Either way, you use as much or as little computing power as you need.

Related concepts go by several names, including grid computing, on-demand computing and utility computing.

The storage industry is jumping on this bandwagon with virtualization software. It's designed to let companies store and manage all their data on large networks — even if they're running many types of operating systems and computer platforms.

Storage companies have been acquiring software companies that specialize in virtualization. EMC picked up VMware for $625 million in 2004. That company specializes in virtual computing software for Intel-based servers.

And in August, EMC acquired Rainfinity, another virtualization software company.

IBM has invested more than $1 billion in this field as well. And Hitachi and Hewlett-Packard are pushing hard into the area.

"It will be a significant change in the way information is managed," Elias said.

4. Technology

One of the hottest trends in disk drive technology is perpendicular recording.

Analysts call it the biggest advancement in disk drives in 15 years. It will allow disk drive manufacturers to increase the amount of data that can be put on a disk by 30% and more.

The current recording method stores bits of data side by side. It's called longitudinal recording, and it's been the standard technique since IBM invented the disk drive 49 years ago. But bits are now so tightly packed that space is running out.

Perpendicular solves that problem because the data are stacked vertically.

Laying the bits up and down instead of side by side provides more room. The approach let Seagate build a 2.5-inch-wide, 160-gigabyte drive that fits snugly into notebook computers.

5. Outlook

In their latest quarterly reports, EMC, Seagate and Network Appliance all gave positive outlooks.

"Looking into 2006, I am bullish on the economic front," said Joseph Tucci, EMC chairman, president and chief executive, during a conference call. "Surveys show these companies will significantly increase capital expenditures in 2006."

Daniel Warmenhoven, chief executive of Network Appliance, said, "We have many reasons to be optimistic about our future."

Upside: Perpendicular recording and virtualization should drive sales for storage firms in the coming years. These advancements could provide a compelling return on investment for buyers.

And there's one constant that will always help the storage industry: Data creation grows larger and faster every year.

"We saw continued acceleration of disk storage systems growth throughout 2005," said Brad Nisbet, research manager at International Data Corp.

Risks: The one problem that has always faced the disk drive industry is overproduction.

With fewer players in the market today, that risk is smaller. And price declines on older drives have not been as severe as in the past.

But competition remains tight, and if one manufacturer decides to launch a price war, it could bring down the profitability of the whole industry.

My prefered picks in the HDD sector is STX and KOMG but I am looking to add one or 2 more stocks. (I am fully loaded with KOMG and STX!)

Mike

STX: Am Tech Ups to Buy from Hold; Ups Tgt to $30 vs $28; Analyst Notes
Wednesday, March 15, 2006 09:02 ET
Issuer: Seagate Technology (NYSE: STX)
Analyst Firm:  American Technology Research
Ratings Action: UPGRADE
Current Rating: Buy (from Hold)
Target Price Action: INCREASE
Target Price: $30.00 (+7.14% from $28.00)
Analyst Comments: The firm believes price war concerns are overdone and industry checks indicate that pricing in desktop HDD's is milder than normal. Expects rational pricing for the industry going forward with MXO eliminated as a competitor.

rebound @ EMA50

update BEFORE earnings:
Seagate Likely To See 2007 Upside From Maxtor Buy
Maya Roney, 04.18.06, 8:47 AM ET

Lehman Brothers raised its price target on Seagate Technology to $31 from $30, citing continued solid execution and the company's recent accretive acquisition of rival hard drive maker Maxtor Corp.

"We believe Seagate will continue to generate revenue growth in excess of the industry, likely see upward revisions in street expectations in earnings per share in calendar 2007 due to Maxtor-related merger synergies, and potentially enjoy an expanding price-to-earnings multiple," wrote analyst Harry Blount in a note Monday.

Blount estimates potential earnings-per-share accretion in the second year of the Maxtor acquisition to be north of 50 cents per share, assuming normal PC demand. Last Thursday, Seagate filed an S-4 suggesting that the acquisition could close around May 17.

The analyst expects Seagate to report March results that are in-line of better than consensus and guidance of earnings of 50 cents per share on revenue of $2.25 billion due to better-than-normal seasonality related to better industry demand and likely share gains in notebook, desktop, enterprise and consumer electronics.

Blount maintained an "overweight" rating on the stock.

"Seagate's valuation remains well below other leading IT hardware companies despite comparable to better industry growth prospects, financial returns, and capital intensity," he added.

1)
Seagate Technology Reports Fiscal Third Quarter 2006 Results
Tuesday , April 18, 2006 16:05 ET

SCOTTS VALLEY, Calif., April 18, 2006 /PRNewswire-FirstCall via COMTEX/ -- Seagate Technology (NYSE: STX) today reported quarterly revenue of $2.3 billion, net income of $274 million, and diluted earnings per share of $0.53 for the quarter ended March 31, 2006. Included in these results are an expense of $21 million for non-cash stock based compensation and a $7 million one-time investment gain. These results compare to revenue of $1.97 billion, net income of $229 million and diluted earnings per share of $0.45 in the year-ago quarter. The year-ago results did not reflect costs associated with non-cash stock based compensation.

For the nine months ended March 31, 2006, Seagate reported revenue of $6.7 billion, net income of $833 million and diluted earnings per share of $1.63. This compares to revenue of $5.4 billion, net income of $427 million and diluted earnings per share of $0.85 for the nine-month period ended April 1, 2005.

"I'm pleased to report yet another quarter of strong operational and financial results. Seagate enjoyed significant year-over-year unit and revenue growth, fueled by continued robust demand for our products across all markets, particularly in notebook and consumer electronics applications," said Bill Watkins, Seagate president and chief executive officer. "Our strong sales of 2.5-inch disc drives during the quarter propelled us to number two in market share in under three years participation in this space. We also just announced the industry's first enterprise drive based on perpendicular recording, allowing us to now deliver the benefits of drives based on perpendicular technology to three of the key markets we serve: consumer, enterprise and mobile computing.

"Overall, we are seeing more consumers and applications than ever before creating, using and sharing digital content. There is also a rapidly growing trend to make that content available on-demand, replacing physical distribution with digital distribution and placing Seagate hard drives squarely at the center of a growing global phenomenon. This growth and diversity in content use and delivery has had a positive impact across all storage markets, and contributed to the fact that 30% of our revenue in the March quarter came from sales outside of markets associated with PC microprocessor shipments; that's nearly double the amount from just two years ago. Going forward, we see profound, ongoing opportunities for storage and believe Seagate is uniquely positioned to leverage these opportunities and to strengthen our position as the global storage leader."

Consumer Electronics Products

Seagate experienced strong growth in the consumer electronics (CE) market in the March quarter, shipping 4.7 million drives, an increase of 12% from the year-ago quarter and 33% sequentially. Shipments into DVR applications grew over 100% year-over-year to 2.5 million units, while shipments into the gaming market increased 39% over the same period.

Mobile Computing Products

Demand for Seagate products in the mobile computing market reached record levels as the company shipped 3.8 million disc drives, representing an increase of 112% from the year-ago quarter and 30% sequentially. Seagate grew overall share in this space for the 7th consecutive quarter. During the quarter, Seagate began volume shipments of its industry-leading 160GB 2.5-inch disc drive utilizing perpendicular recording technology. Given Seagate's growing strength in the high-capacity portion of this market, the company's shipments of capacity points at 80GB and greater grew sequentially 26%. Also during the quarter, industry average capacity in this space grew to over 60GB, while Seagate's average capacity reached almost 70GB.

Enterprise Products

Seagate extended its leadership in the enterprise space during the quarter, shipping 3.5 million units. Seagate has now expanded its industry- leading portfolio of enterprise drives with the industry's first enterprise disc drive utilizing perpendicular recording technology. The 15,000 RPM, 300GB, Cheetah 15K.5, delivers 30% better performance over previous versions and doubles the capacity of any 15,000 RPM drive on the market. The new drive will be in qualification at several OEMs this quarter.

Desktop Products

Seagate continued its leadership in the desktop storage space during the quarter by shipping 17.5 million desktop drives, an increase of 12% from the year-ago quarter. Channel sales for Seagate desktop products remained healthy throughout the quarter and Seagate exited the quarter with under five weeks of distribution channel inventory.

Pricing

The average selling price for all Seagate products, on a blended basis, decreased approximately $2.00 from the December quarter. In aggregate, price decreases on a "like for like" product basis during the March quarter were typical for a March quarter and in line with the company's expectations at the beginning of the quarter.

Business Outlook

The following outlook for the June quarter and fiscal year 2006 reflects only the financial results of Seagate Technology and does not include any financial results for Maxtor. If the proposed acquisition of Maxtor is closed during the June quarter, the reported results for the quarter will include the financial results of Maxtor from the date of closure through the end of the quarter and transaction related financial impacts.

For the June quarter, Seagate expects to report revenue of $2.1-2.25 billion, and diluted earnings per share of $0.46-0.49, excluding expenses associated with non-cash stock based compensation. Non-cash stock based compensation is expected to be approximately $23 million or $0.04 per share, equating to GAAP earnings per share of $0.42-0.45.

For fiscal year 2006, Seagate expects to report earnings per share in the range of $2.21-$2.24, excluding expenses associated with non-cash stock based compensation. Non-cash stock based compensation is expected to be approximately $80 million or $0.16 per share, equating to GAAP earnings per share of $2.05-$2.08.

Dividend

The company has declared a quarterly cash distribution of $0.08 per share to be paid on or before May 19, 2006 to all common shareholders of record as of May 5, 2006.

Conference Call

Seagate will hold a conference call to review the fiscal third quarter results at 2:30 p.m. Pacific Time today. The conference call can be accessed online at seagate.com or by phone as follows:

USA:  877-223-6202
International:  706-679-3742

2)

Seagate Technology Halted -Tops Q3 Estimates But Sees Q4 In Line to Lower
Tuesday , April 18, 2006 16:27 ET

Boston, Apr 18, 2006 (MidnightTrader via COMTEX) -- Seagate Technology (STX) says FYQ3 sales were $2.3 billion, more than the FC mean for $2.253 billion. It earned $0.53 per share, including stock compensation expense. The FC mean less items was $0.52 per share. Q4 sales are seen between $2.1-2.25 billion, in line with the FC mean for $2.23 billion. EPS without items are seen between $0.46-0.49, in line to below the FC mean for $0.49. FY06 EPS less items are seen between $2.21-$2.24, above the FC mean for $2.11. It declared a quarterly cash distribution of $0.08 per share to be paid on or before May 19 to all common shareholders of record as of May 5.

Any comments on the results and analysis? time for entering if price is dropping down?

yahoo quotation:
http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=1602527417&tid=stx&sid=1602527417&mid=34777

Analysis 1:

Lowering Rating From Outperform To Peer Perform On Weaker
Near-term Outlook; Lowering Estimates
While we continue to view STX's strategic move to acquire MXO favorably and remain
positive about the long-term prospects for the drive industry, we are lowering our rating on
STX from Outperform to Peer Perform given STX's weak outlook and negative data points at
the margin, which, coupled with pending integration of MXO, could temper STX's near-term
performance. As to collateral impact, while both WDC and KOMG are likely to see weakness, we're  maintaining our Outperform rating for both since WDC is likely to gain share from
MXO/STX merger (though lower pricing could offset some upside) and KOMG should
benefit from the uptick in demand at WDC and continued constraints in media.
Relative to the sector, we continue to have a favorable view: media constraints are acting as a
gaiting factor in promoting price discipline and consolidation is likely to lead to further
stability. However, history has shown that HDD sector tends to outperform with upward
estimate revisions (as opposed to cuts).
STX reported 3Q06 post-option EPS (ex $7mm in one-time investment gain) of $0.51, in line
w/ our est but below Street at $0.52, despite reporting revs of $2.28bn, which was ahead of
our/Street est, owing to lower margins from mix shift. STX also saw more aggressive pricing
in desktop HDDs with channel inventory increasing from 3.8 to 4.8 wks.
Reflecting STX's weaker outlook, we are lowering our FY06 post-options EPS from $2.09 to
$2.06, FY07 EPS from $2.37 to $2.09, and FY08 EPS from $2.91 to $2.61. We are lowering
our 4Q06 post-options EPS from $0.46 to $0.42.
As for valuation, using a 10x-11x P/E (lowered from our prior 11x-12x P/E assumption due
to weaker outlook and potential MXO integration issues), we arrive at a CY06 year-end fair
value of $28-$31 (reduced from $34-$38). We note that the sector tends to trade more in line with direction of the earnings momentum rather than specific valuation target.
Lowering STX Rating From Outperform To Peer Perform. We are lowering our rating of STX from Outperform to Peer Perform owing to STX's weaker-than-expected outlook, as well as our concerns about negative data points that, coupled with potential issues stemming from the integration of MXO, could temper STX's near-term performance.

These negative data points include:
• Higher-than-expected price erosion in desktops and notebooks;
• Lower-than-expected margins owing to mix shift to drives for consumer electronics (namely gaming systems), which is likely to pressure margins in the near-term;
• Increase in channel inventory from 3.8 weeks to 4.8 weeks, although still within STX's target range of 4-6 weeks;
• Pending integration of MXO, which could lead to near-term dislocation for STX.

Despite our near-term concerns, we remain positive about the long-term prospect for the drive industry and STX.
Industry dynamics remains favorable given continued media constraints that are acting as a gaiting factor in promoting price discipline with pending STX/MXO merger likely adding to the stability. STX could benefit from earlier-than-expected close of MXO acquisition, which could dampen the magnitude of revenue attrition. Depending on the timing of the European Union approval, which is schedule to issue its decision as early as April 27, STX expects to close the acquisition in late May. Otherwise, STX is likely to close the acquisition in July after its fiscal quarter end in June. Moreover, STX could benefit from its lead in new technologies (i.e., 160 GB/platter, PMR). Nonetheless, history has shown that drive stocks tend to outperform when estimates are revised upward rather than when they are being cut.
As to collateral impact, while both WDC and KOMG is likely experience weakness, we believe that factors that could temper STX's near-term outlook is largely STX-specific. On the contrary, we believe that both WDC and KOMG could benefit from MXO/STX merger --i.e., WDC could gain share from MXO and STX, although lower pricing could offset some upside, while KOMG could benefit from WDC's share gains, as well as continued constrain in media.
3Q06 EPS Inline With Expectations But Outlook Disappointing. STX reported pro forma 3Q06 EPS, excluding $21 million in non-cash based compensation and $7 million in one-time licensing fee, of $0.55 (vs. $0.45 a year ago), which was inline with our estimate of $0.55 and Street expectation of $0.56, although lower tax rate (1.03% compared to our estimate of 5%) added $0.02 to EPS. Revenues of $2.29 billion, up 16% y/y, were ahead of our and First Call estimate of $2.25 billion driven by unit upside in notebook, enterprise and CE
drives offset by weaker sales of desktop drives. Blended ASP of $78 was down $2 from last quarter and was inline with our estimate. More importantly, the company provided a tepid outlook for the June quarter with EPS of $0.46-$0.49 (excluding $0.04 in options expense) on revenues of $2.10-$2.25 billion compared to our estimate of $0.51 in EPS on revenues of $2.20 billion and First call consensus of $0.52 in EPS on revenues of $2.23 billion.
Unit shipments: Total units of 29.5 million were above our estimate of 29.0 million driven by strong growth in notebook, CE and enterprise drives offset by weakness in desktop drives.

Positives:
• Mobile units came in at 3.77 million, up 113% y/y, and were above our 2.99 million unit estimate despite continued media tightness. Moreover, the company expects demand to be strong but the quarter to be seasonally down in the June quarter.
• Enterprise units of 3.51 million, up 2% year/year from 3.44 million a year ago, were above our estimate of 3.47 million unit estimate. Seagate expects enterprise demand to be in line with seasonality in 4Q06 with slight sequential decline in unit shipments.
• Consumer units came in at 4.69 million, up 33% sequentially, and above our estimate of 4.35 million owning to strong demand for drives powering DVR applications (2.5 million units were shipped or 100% growth y/y). The company noted that drive shipments to the gaming market increased by 39% y/y. Seagate shipped approximately 700,000 1-inch drives during the quarter.
• ASPs of $78 were down $2 from the prior quarter and were inline with our estimate. The company noted that it saw price erosion similar to the December quarter on a blended basis but saw higher erosion in desktop and notebook drives offset by less-than-expected declines in CE and enterprise drives.

Negatives:
• Desktop units came in at 17.48 million, up 12% y/y, but below our 18.19 million estimate. Seagate expects desktop drive shipments to decline in 4Q06 in line with seasonality.
• Desktop channel inventories stood at 4.8 weeks, up from 3.8 weeks at the end of last quarter, and was inline with Seagate's target range of 4-5 weeks.
• STX's own inventory increased by $44 million to $549 million with inventory turns down from
13.5x to 12.6x sequentially. Lowering Estimates. Reflecting STX's tempered outlook, we are lowering our estimates. Please note that our estimate forecast for FY07 and FY08 is predicated on the merger receiving regulatory and shareholder approvals since we have assumed the merger to complete during the September quarter and have reflecting its impact starting 2Q07, which could be conservative since the merger could close as early as May. STX plans to provided an updated outlook for the merged company during its analyst meeting in June 8th.

Lowering FY06 Estimates On Lower Gross Margin: We are lowering our FY06 (June) pro form EPS (excluding stock-based compensation expenses of $0.15) estimate from $2.25 to $2.21 on revenues of $8.8 billion, up 17% y/y -- at the low-end of the company's guidance of $2.21-$2.24. We are assuming unit shipment of 113.8 million (up from our prior 113.6 million units estimate) with ASP of $78 (no change) on gross margin of 25.1% (lowered from our prior 25.6% estimate).

Lowering 4Q06 Estimate: We are also lowering our 4Q06 (June) pro forma EPS (excluding $0.04 in options expenses) estimate from $0.51 to $0.46 on revenues of $2.20 billion, at the low-end of guidance of $0.46-$0.49 in EPS on revenues of $2.1-$2.25 billion.
Lowering FY07 Estimates On Lower Gross Margin: We are lowering our FY07 pro forma EPS
(excluding $0.17 from stock-based compensation expenses) estimate from $2.55 to $2.25 on revenues of $12.2 billion, up 38% y/y but lowered from our prior $12.5 billion assumption. Our estimate also includes revenue contribution from MXO acquisition. We assumed 65% of MXO's CY07 revenue estimate of $4.5 billion (or $2.9 billion) to be accretive to Seagate's FY07 revenues. In addition, we assumed cost synergies of $92 million in FY07. We are assuming gross margin of 24.4%, towards the low end of guidance range of 24%-26%.
Lowering FY08 Estimates: We are lowering our FY08 EPS (excluding $0.19 from options expense) from $3.10 to $2.80 on revenues of $13.3 billion, up 9% y/y. Our forecast reflects our assumption of 65% revenue accretion from MXO's and cost synergies of $300 million in FY08. We are estimating gross margin of 25.3%, which is slightly below the company outlook of 26%.

Valuation:
Lowering 2006 Year-End Fair Value From $34-$38 to $28-$31. We are lowering our 2006 fair
value range from $34-$38 to $28-$31 by applying a 10x-11x P/E multiple (lowered from our prior assumption of 11x-12x) on our CY07 EPS estimate. We believe that 10x-11x P/E multiple is reasonable since it is a discount to STX's historical median and WDC's target multiple of 13x and reflects our concerns about aggressive pricing in desktop drives, channel inventory increase and MXO acquisition related risks.

Analysis 2:
http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=1602527417&tid=stx&sid=1602527417&mid=34780

Slight upside to Q, but conservative guidance for June

STX reported results slightly above consensus, with revenue of $2.29B and EPS of
$0.53 beating the Street ($2.25B & $0.52). EPS was helped by a $7M equity gain
or roughly $0.02. CE and NB growth were better than our model, but offsetting
items were slightly higher ASP declines and higher diluted shares. As we
expected, mgmt gave conservative guidance for June. Overall, we believe the
quarter and June guidance reflect typical seasonality, with ASP declines at
reasonable levels.
Industry is currently healthy; seasonality is OK
STX's result and comments on the industry made us more comfortable with our
estimates for WDC. We estimate STX's ASP declines were roughly 4.6% in DT
and less in NB, which is in line with our expectations for WDC. Despite
conservative guidance the industry is healthy, with supply/demand in balance and
channel inventory in the 4-6 week range. We believe management's guidance is
prudent, and reflects the realities of a weak quarter, the distractions around
closing the Maxtor acquisition, and seasonal ASP declines.

Near-term catalysts are MXO merger, Analyst Day, and 2H product ramps
As outlined in our 4/12/06 preview note, we believe a combined STX-MXO could
conservatively earn $2.50 in FY07. With the shareholder vote now scheduled for
May 17th , we expect investors to increasingly focus on the combined EPS
numbers, which should provide upside to the shares. In addition, STX's Analyst
Day (first week of June) could drive upside and C2H product ramps of
160GB/platter DT drives and PMR-based NB drives, could provide further upside.
Shares are attractive at currently levels; maintain Buy
We are adjusting our FY06 estimates to reflect a higher share count, and our
slightly more conservative ASP assumptions. Our FY06 EPS estimate is now
$2.06, versus our prior $2.08. Our FY07 EPS estimates remain unchanged. Our
$33 price target is based on our combined FY07 EPS estimate of $2.50 and STX's
historic median forward PE multiple of 13x. The hard disk drive sector is inherently
volatile and subject to market share battles and aggressive price declines. Risks
include an unfavorable supply/demand environment and failure to achieve
competitive time-to-market or time-to-volume.

Investment Thesis
Seagate's results this quarter showed a return to typical seasonality for the HDD industry.
PC units declined, while CE grew. Although ASP declines were higher than our expectations
at the beginning of the quarter, declines were still within reasonable levels, with Seagate's
blended ASP falling 2.6% sequentially. As we expected, management gave conservative
guidance for the June quarter, indicating that the PC business and enterprise markets will be
slightly down. We believe management's guidance is prudent, and reflects the realities of a
weak quarter, the distractions around closing the Maxtor acquisition, and seasonal ASP
declines. Despite conservative guidance the industry is healthy, with supply/demand in
balance and channel inventory in the 4-6 week range.
Notebook market slows, but Seagate bucks seasonality despite a slowdown in the overall notebook business, Seagate saw substantial growth, with PC NB units up 30% this quarter, driven by new products and share gains with OEMs. In addition, Seagate's Xbox units were roughly 5x higher this quarter, with units of 1.5M surpassing units of 300K last quarter. On a combined basis, we believe Seagate's 2.5-inch share (NB and CE) is now more than 20%.
Seagate shares are attractive at current levels, with NT catalyst ahead

We believe the market is valuing Seagate on a standalone basis, despite clear confidence
from Seagate that it expects to close the Maxtor acquisition. Last week in an 8K filing,
Seagate announced the date for the shareholder vote (May 17th ), and indicated it expects to close the acquisition in May. Based on our conservative estimates for the combined
company, we believe STX could earn $2.50 in FY07. At Seagate's median PE of 13x, this
would imply a fair value for the shares in the low $30 range. We believe catalyst to the
shares moving higher are (1) the closing of the STX-MXO deal in mid May, (2) new product
announcements and detail on the merged company to be presented at STX's Analyst Day the
first week of June, and (3) upside to expectations in C2H based on 160GB/platter DT and
PMR-based NB drives which will be fully ramped in the second half.

Guidance and outlook
As we expected, management gave conservative guidance for the June quarter, guiding
revenue slightly lower than the Street (G: $2.1-$2.25B vs. Street at $2.23B), and guiding EPS
lower (G: $0.42-$0.45 vs. Street at $0.49). Management maintained the mid-point of its prior
guidance, but tightened the FY06 EPS range to $2.05-$2.08, from $2.04-$2.09. We have
maintained our F4Q06 revenue estimate of $2.16B, but lowered our EPS estimate to $0.44,
primarily reflecting lower margins and a higher share count. Our revised FY06 estimates are
now $8.84B and EPS of $2.06. Our standalone FY07 EPS estimates remain unchanged at
$2.18, however we believe this number is becoming increasingly irrelevant. On a combined
basis, our conservative estimates for Seagate-Maxtor are $2.50 in FY07. For our standalone
STX model, please see Figure 3 below. For our combined model, please see our 4/12/06
note "March Preview."

Valuation
Since its IPO, Seagate's average FTM P/E has been 15x, with a median P/E of 13x and a one
standard deviation range of 7x-23x. Our $33 price target implies that the combined Seagate-
Maxtor trades at 13x our FY07 EPS estimate of $2.50. On a standalone basis, this implies
Seagate trades at 15x our standalone FY07 EPS estimate of $2.18. Our 13x multiple is in line
with our 13x multiple for Western Digital, as we expect both companies to benefit from the
Seagate-Maxtor merger. Historically HDD stocks have traded together with a P/E range of
roughly 8x-20x. At current levels, we rate Seagate's shares a Buy.

Risks
The hard disk drive sector is inherently volatile and subject to market share battles and
aggressive price declines. While we believe market fundamentals are currently in check, a
decline in overall demand could lead to aggressive tactics by any one of the HDD vendors.
Risks include an unfavorable supply/demand environment and failure to achieve competitive
time-to-market or time-to-volume. Specific risks to Seagate include market share losses as a
result of the announced Maxtor merger, miss-execution in its lines of business, and miss-
execution in ramping its new PMR-based drives.

EMA50 should hold as support  >:D

nice summary link:
http://www.knobias.com/individual/public/news.htm?eid=3.1.3c584b84f81106865c549c7efadd91aeed2ae2b05a7097848690a45283a83076

updates:

Seagate Tech    STX    Kaufman Bros    Buy                 $28 » $33
Seagate Tech    STX    Needham & Co  Strong Buy    $32 » $34


Michael, your opinion is appreciated!
cheers
Oliver

Hi Oliver,

I was frankly also a bit disappointed about the outlook and I think they are either a bit too conservative or maybe they expect the competition with WDC to heat up the closer we get to the Maxtor take over.

When that is said STX is still a great stock to hold long time. They are still a market leader and are cheaper than their main (albeit smaller) competitors on all key indicators.

I am very encouraged by the phenomenal growth on the consumer equipment side. 3.8 million drives for mobile applications and 2.5 million for DVR. Who would have thought just two years ago that your mobile phone would come with a hard disk? Two years from now I wouldn't be surprised if people couldn't imagine a mobile phone without a Hard Disk Drive. (where am I going to save my vacation videos  ??? )

The HDD sector is still very interesting and very cheap compared to the growth and perspectives. STX might be a bit depressed in the coming days but long term it will do great!

update:
STX: Short Interest DN 64.2% to 12.1M in Jun 2006
Wednesday, June 21, 2006 17:21 ET

According to new short interest data from NYSE, short interest for Seagate Technology (NYSE: STX) DECREASED 64.2% to 12,116,018 shares for the month ended mid-June, 2006.

SYMBOL               MAY            JUNE          CHANGE       %CHANGE     DAYS/COVER
--------   -------------   -------------   -------------  ------------  ----------
STX           33,800,239      12,116,018     -21,684,221       -64.15%           2

Based on STX's 20-day average daily share volume of 8,566,220, it would require approximately 2 day(s) of buying to cover this short interest.

Quote from: Melf Elf on September 09, 2006, 05:10:04 AM
Investors had their own ideas, though.  Shares of Seagate fell 11 percent during the week to end Thursday at $20.06 on the New York Stock Exchange.

Oliver,

Technically, a big reason that investors had their own ideas and weren't buying the bullish call (literally) was that on Friday, September 1, STX:

1. Put in a Bearish Doji Star Hangman

2. At the top of a Bear Flag

3. Just below the 200DMA, which is bearishly positioned above the 50DMA

The Bear Flag broke at 20.92 on Wednesday of this week.

Note The Street.com's call last January for a year-end target of $32.  STX topped out six weeks later,  has completed several bearish patterns throughout 2006, and currently is 37% below the $32 year-end target.

I suspect that there might be a nice buying opportunity in this stock/sector before year end.  Just as they "sell the good news" at tops when "earnings were much better than expected," there could be a "buy the bad news selloff" when "the earnings were worse than we expected," and when analysts are downgrading the sector, like last October.

Stocks often behave in a counter-intuitive manner (meaning that they act opposite of what seems to make sense).

I wrote a piece earlier in this folder about how STX broke out of a beautiful Bullish Inverse H&S pattern on November 24, 2004 and rallied 50% into June, 2005 when the P/E ratio was fairly high, and how it broke down from a H&S Top in August, 2005 when the P/E ratio was very low.

Sometimes, the market doesn't make sense.  ???  ::)

Where it did make sense was the 100+% rally in STX from October, 2005 to March, 2006.  The stock was rewarded for the good fundamentals.

update:
1)
SEAGATE TECHNOLOGY (STX.N: Quote, Profile, Research)
Current Prior Rating Neutral Buy

--Merrill Lynch said though the company beat the brokerage's earnings expectations for the first quarter, Seagate lowered its second-quarter and full-year expectations.

--The brokerage said improvements for the maker of computer hard-disk drives would be dramatic in the second half of fiscal 2007 but fall shy of the company's revised outlook.

--Merrill Lynch said it now expects Seagate's 2007 earnings per share at $1.60, compared with the company's outlook of $1.70 to 1.80. (Reporting by Purwa Khandelwal in Bangalore)

2)
Seagate Technology initiated with "underweight"

Thursday, October 05, 2006 10:26:56 AM ET
Prudential Financial

NEW YORK, October 5 (newratings.com) - Analyst Jesse Tortora of Prudential Financial initiates coverage of Seagate Technology (STX.NYS) with an "underweight" rating. The target price is set to $17. In a research note published this morning, the analyst mentions that the company is expected to gain 25% share of the high-growth 1.8" market by the end of 2007 or early 2008. The analyst expresses her concern regarding weakening demand in the PC and HDD markets, which is resulting in increasing inventories across the supply chain. Prudential Financial expects the company to face margin pressure and tough pricing trends in the forthcoming quarters.

Im short STX. Looks like we got a double top forming

STX update:
1)
Seagate Technology "outperform," target price reduced
Wednesday, April 18, 2007 9:00:03 AM ET
Credit Suisse
NEW YORK, April 18 (newratings.com) - Analysts at Credit Suisse reiterate their "outperform" rating on Seagate Technology (STX.NYS). The target price has been reduced from $35 to $28.
2)
Seagate Technology "underweight," target price reduced
Wednesday, April 18, 2007 10:24:24 AM ET
Prudential Financial
NEW YORK, April 18 (newratings.com) - Analysts at Prudential Financial reiterate their "underweight" rating on Seagate Technology (STX.NYS). The target price has been reduced from $21 to $19.
3)
Seagate Technology "sector perform," target price reduced
Wednesday, April 18, 2007 10:27:40 AM ET
RBC Capital Markets
NEW YORK, April 18 (newratings.com) - Analysts at RBC Capital Markets reiterate their "sector perform" rating on Seagate Technology (STX.NYS). The target price has been reduced from $26 to $23.
4)
Seagate Technology downgraded to "hold"
Wednesday, April 18, 2007 10:54:34 AM ET
Brean Murray, Carret & Co
NEW YORK, April 18 (newratings.com) - Analysts at Brean Murray downgrade Seagate Technology (STX.NYS) from "buy" to "hold." The target price has been reduced from $35 to $25.
5)
Seagate Technology downgraded to "hold"
Wednesday, April 18, 2007 11:12:35 AM ET
WR Hambrecht + Co
NEW YORK, April 18 (newratings.com) - Analysts at WR Hambrecht downgrade Seagate Technology (STX.NYS) from "buy" to "hold."
6)
Seagate Technology "above average," target price reduced
Wednesday, April 18, 2007 12:58:18 PM ET
Caris & Company
NEW YORK, April 18 (newratings.com) - Analysts at Caris & Company reiterate their "above average" rating on Seagate Technology (STX.NYS). The target price has been reduced from $24 to $23.
7)
Seagate Technology "buy," target price reduced
Wednesday, April 18, 2007 1:01:29 PM ET
A.G. Edwards & Sons
NEW YORK, April 18 (newratings.com) - Analysts at AG Edwards reiterate their "buy" rating on Seagate Technology (STX.NYS). The target price has been reduced from $33 to $28.
8.)
Seagate Technology "underweight," target price reduced - update
Wednesday, April 18, 2007 1:42:57 PM ET
Prudential Financial
NEW YORK, April 18 (newratings.com) - Analyst Jesse Tortora of Prudential Financial reiterates her "underweight" rating on Seagate Technology (STX.NYS), while reducing her estimates for the company. The target price has been reduced from $21 to $19.
In a research note published this morning, the analyst mentions that the company has reported its EPS for the March quarter short of the recently reduced consensus expectation due to lower-than-anticipated demand and higher-than-expected pricing pressure for its desktop class drives. Seagate Technology has reduced its EPS guidance for the June quarter by roughly $0.25 to $0.34-$0.38, which indicates gross margins of 22%, short of the previous guidance of 24%-26%. The EPS estimates for FY07 and FY08 have been reduced from $1.60 to $1.37 and from $2.62 to $2.02, respectively.
9)
Seagate Technology "neutral," target price reduced - update
Wednesday, April 18, 2007 2:34:58 PM ET
UBS
NEW YORK, April 18 (newratings.com) - Analysts at UBS maintain their "neutral" rating on Seagate Technology (STX.NYS), while reducing their estimates for the company. The target price has been reduced from $26 to $23.
In a research note published this morning, the analysts mention that the company has posted its F3Q07 non-GAAP EPS short of the estimates. The downward revision in the EPS estimates reflects a weaker market for the desktop consumer PCs and a more challenging competitive environment, the analysts add. The EPS estimates for 2007 and 2008 have been reduced from $1.66 to $1.40 and from $2.55 to $2.16, respectively.

last but not least:
Seagate Technology "buy," price objective reduced

Thursday, April 19, 2007 2:39:03 AM ET
A.G. Edwards & Sons

NEW YORK, April 19 (newratings.com) - Analyst Aaron C Rakers of AG Edwards maintains his "buy" rating on Seagate Technology (STX.NYS), while reducing his estimates for the company. The 12-18 month price objective has been reduced to $28.

In a research note published yesterday, the analyst mentions that the company has reported its F2Q07 revenues in-line with its weaker-than-expected preliminary results. Seagate Technology has issued its non-GAAP EPS guidance for the June quarter at $0.34-$0.38, short of the previous estimates. The EPS estimates for FY07 and FY08 have been reduced from $1.61 to $1.45 and from $2.52 to $1.94, respectively.

wow >:D >:D >:D
Michael, whats your opinion??

Chinese Seek to Buy a U.S. Maker of Disk Drives
By JOHN MARKOFF

SAN FRANCISCO, Aug. 24 — A Chinese technology company has expressed interest in buying a maker of computer disk drives in the United States, raising concerns among American government officials about the risks to national security in transferring high technology to China. The overture, which was disclosed by the chief executive of one of the two remaining drive makers in the United States, William D. Watkins of Seagate Technology, has resurrected the issues of economic competitiveness and national security raised three years ago when Lenovo, a Chinese computer maker, bought I.B.M.'s personal computer business.

Tensions have been increasing lately between the countries over China's ambitions in developing its military abilities and advanced technologies for industrial and consumer uses.
Although disk drives do not fall under a list of export-controlled technologies, the attempted purchase of an American disk drive company would require a security review by the federal government, according to several government officials.
In recent years, modern disk drives, used to store vast quantities of digital information securely, have become complex computing systems, complete with hundreds of thousands of lines of software that are used to ensure the integrity of data and to offer data encryption.
That could raise the prospect of secret tampering with hardware or software to make it possible to pilfer information via computer networks, intelligence officials have warned.

Seagate has recently begun selling drives with hardware encryption abilities.

Mr. Watkins did not identify the Chinese company. But he said that the possibility of an acquisition had sent alarm bells ringing at some government agencies.

"The U.S. government is freaking out," Mr. Watkins said during an interview on Thursday.

Reached Friday night, Treasury officials declined to comment on possible Chinese overtures for an American maker.

While Mr. Watkins said that Seagate, which is the largest drive maker in the United States, was not for sale, he also said that if a high enough premium was offered to shareholders it would be difficult to stop.

Seagate's shares rose 1.05 percent Friday to close at $24.96 and were up about 4 percent for the week after news that it might enter the flash memory market. There does not appear to have been any significant increase in trading of Seagate options.

With a booming economy and $1.33 trillion in foreign-exchange reserves, Chinese companies are in a position to acquire American companies, as Japanese and West European companies were several decades ago. While those earlier acquisitions were often opposed out of fears that they would damage American economic competitiveness, the acquisition of American companies by Chinese companies is regarded with more suspicion, particularly in the high-tech sector.

Since the Lenovo sale, the government has become increasingly concerned about technology security, according to members of federal advisory committees.

"Seagate would be extremely sensitive," said an industry executive who participates in classified government advisory groups. "I do not think anyone in the U.S. wants the Chinese to have access to the controller chips for a disk drive. One never knows what the Chinese could do to instrument the drive."

The transfer of advanced disk drive manufacturing technology would give the Chinese a major leg up in competing in information technologies. China, however, still lags in basic manufacturing skills like semiconductor design and manufacturing.

"This is clearly a critical component of a computer system and the purchase by the Chinese or other nations merits a full review to determine what our risks are," said Michael R. Wessell, a commissioner of the U.S.-China Economic and Security Review Commission, a group that monitors the national security implications of trade with China for Congress.

I.B.M., which invented the disk drive in the 1950s and which dominated the industry through the 1990s, sold its disk drive business to the Japanese computer maker Hitachi in 2002, leaving just two American companies: Seagate, based in Scotts Valley, Calif., and Western Digital, based in Lake Forest, Calif.

Two other Japanese makers, Fujitsu and Toshiba, and a division of Samsung, a South Korean electronics conglomerate, are also major manufacturers of the storage devices.

Western Digital executives declined to comment.

Kenneth Lieberthal, the senior director for Asia at the National Security Council during the later years of the Clinton administration, expressed strong doubt that the Chinese government would allow a technology company to pursue an acquisition if the transaction were likely to draw criticism from the United States government, even if that criticism did not reach the level of an actual prohibition on a deal.

"The Chinese have been very concerned about how to invest in the United States without producing the kind of political firestorm they ran into when they tried to buy Unocal," said Mr. Lieberthal, a professor of politics and business administration at the University of Michigan. "The government really does not want to confront the kind of situation it ran into with Unocal."

The China National Offshore Oil Corporation, a state-owned company, abandoned its plan to buy Unocal in 2005 when it touched off opposition in Congress. Mr. Lieberthal said that the Chinese government had only been lukewarm about supporting Cnooc, and was likely to be even more cautious now. "If' they've really decided to go after a high-end computer equipment manufacturer, they've really decided to test the waters," he said.

If a Chinese company has made an advance to an American company in a technologically sensitive industry without obtaining prior support from the Chinese government, the Chinese company would be in serious trouble with Beijing officials, Mr. Lieberthal said. So it is unlikely that any serious approach would be made by a Chinese company without careful prior consultations in Beijing. Yet the Chinese government also faces a quandary: how to improve yields on its foreign exchange reserves, more than two-thirds of it in dollars. Roughly $100 billion is believed to be in American mortgage-backed securities, an investment that has suffered during the recent financial turmoil. A Chinese government investment fund spent $3 billion to buy nearly 10 percent of the Blackstone Group this summer, but made a point of taking nonvoting shares to reduce the risk of a political backlash. Stakes in financial services companies also tend to be less controversial than stakes in high-tech enterprises.
Beijing authorities are also starting to encourage companies and even individuals to invest more overseas, as a way to offset some of the foreign investment pouring into China. The inflow of money from investment and trade surpluses has been putting upward pressure on the value of China's currency, threatening to erode some of the competitiveness of Chinese exports. If a Chinese company does make an actual bid for an American high-tech company, a former government official said, and that bid is blocked for political reasons, then Chinese companies may become even warier of investing in American companies and the government in Beijing may begin to suspect that Washington so distrusts China that it is trying to throw roadblocks in the path of its economic development.

"If they are blocked, I would suspect this would at a minimum contribute to their being gun-shy of the U.S. government," said Mr. Lieberthal, a Chinese speaker who stays in close touch with a range of Chinese government officials and American corporate leaders.

http://www.nytimes.com/2007/08/25/business/worldbusiness/25drive.html?_r=1&oref=slogin

Seagate Technology Updates Fiscal First Quarter 2008 Outlook
Tuesday , August 28, 2007 16:11ET

SCOTTS VALLEY, Calif., Aug. 28, 2007 (Canada NewsWire via COMTEX) --


Seagate Technology (NYSE: STX) today provided an update of its expected results for the fiscal first quarter 2008 which ends September 28, 2007. The company now expects revenue of $3.15 - $3.25 billion, GAAP diluted earnings per share of $0.57 - $0.61 and non-GAAP diluted earnings per share, which excludes $27 million of purchased intangibles amortization and other charges associated with the Maxtor and EVault acquisitions, of $0.62 - $0.66.

The company's original outlook for the first fiscal quarter was for revenue of $2.9 - $3.0, GAAP diluted earnings per share of $0.35 - $0.39 and non-GAAP diluted earnings per share, which excludes $27 million of purchased intangibles amortization and other charges associated with the Maxtor and EVault acquisitions, of $0.40 - $0.44.

The primary factors leading to the improved outlook for the first fiscal quarter are [1] industry unit demand at the high-end of the predicted range; [2] favorable pricing thus far in the quarter reflecting a more balanced supply and demand environment, and [3] a better product mix.

Gross margin is expected to expand to approximately 24% due to the demand, pricing and product mix factors referenced above. Operating expenses (R&D and SG&A) are expected to increase above the company's previous outlook due to higher variable compensation costs. The revised outlook assumes a 6% tax rate and diluted shares outstanding of 555 million.

Given the typical shipment profile for a September quarter and the dynamic nature of the demand and pricing environment, actual results during the balance of the quarter will heavily influence the company's financial performance for the quarter.

fyi:

Seagate Technology "sector perform," target price raised
Wednesday, August 29, 2007 10:29:43 AM ET
RBC Capital Markets
NEW YORK, August 29 (newratings.com) - Analysts at RBC Capital Markets reiterate their "sector perform" rating on Seagate Technology (STX.NYS). The target price has been raised from $24 to $25.
&
Seagate Technology "overweight," target price raised
Wednesday, August 29, 2007 10:33:56 AM ET
Lehman Brothers
NEW YORK, August 29 (newratings.com) - Analysts at Lehman Brothers reiterate their "overweight" rating on Seagate Technology (STX.NYS). The target price has been raised from $27 to $29.
&
Seagate Technology "buy," target price raised
Wednesday, August 29, 2007 10:08:43 AM ET
Brean Murray, Carret & Co
NEW YORK, August 29 (newratings.com) - Analysts at Brean Murray reiterate their "buy" rating on Seagate Technology (STX.NYS). The target price has been raised from $28 to $34.
&
Seagate Technology "above average," target price raised
Wednesday, August 29, 2007 9:57:11 AM ET
Caris & Company
NEW YORK, August 29 (newratings.com) - Analysts at Caris & Company reiterate their "above average" rating on Seagate Technology (STX.NYS). The target price has been raised from $25 to $30.
&
Seagate Technology "buy," target price raised
Wednesday, August 29, 2007 9:29:27 AM ET
Needham & Co
NEW YORK, August 29 (newratings.com) - Analysts at Needham & Co reiterate their "buy" rating on Seagate Technology (STX.NYS). The target price has been raised from $29 to $33.

chart

more detailed  ;D

Seagate Technology "outperform," estimates raised

Wednesday, August 29, 2007 4:22:55 PM ET
Credit Suisse

NEW YORK, August 29 (newratings.com) – Analysts at Credit Suisse reiterate their "outperform" rating on Seagate Technology (STX.NYS), while raising their estimates for the company. The target price is set to $28.

In a research note published this morning, the analysts mention that the company has raised its revenue and pro forma EPS guidance for F1Q08 from $2.9-$3.0 billion to $3.15-$3.25 billion and from $0.42-$0.44 to $0.62-$0.66, respectively. The upside was driven by improved industry demand and a favourable pricing and product mix, the analysts say. Seagate Technology has issued its gross margin guidance at 24%, ahead of the estimates. The EPS estimate for FY08 from $1.91 to $2.06.


&

Seagate Technology "sector perform," target price raised - update

Wednesday, August 29, 2007 3:17:45 PM ET
RBC Capital Markets

NEW YORK, August 29 (newratings.com) – Analysts at RBC Capital Markets reiterate their "sector perform" rating on Seagate Technology (STX.NYS), while raising their estimates for the company. The target price has been raised from $24 to $25

In a research note published this morning, the analysts mention that the company has raised its F1Q08 revenues and non-GAAP EPS from $2.90-$3.00 billion to $3.15-$3.25 billion and from $0.42-$0.44 to $0.62-$0.66, respectively. Seagate Technology's guidance for the quarter is ahead of expectations, driven by improved pricing, robust unit demand and a favorable product mix, the analysts say. The EPS estimates for FY08 and FY09 have been raised from $12.1 to $12.9 and from $12.5 to $13.3, respectively.


&

Seagate Technology "overweight," target price raised - update

Wednesday, August 29, 2007 2:24:34 PM ET
Lehman Brothers

NEW YORK, August 29 (newratings.com) - Analyst Harry E Blount of Lehman Brothers reiterates his "overweight" rating on Seagate Technology (STX.NYS), while raising his estimates for the company. The target price has been raised from $27 to $29.

In a research note published this morning, the analyst mentions that the company has preannounced its results for the September quarter significantly ahead of the consensus. Seagate Technology's results were boosted by the back-to-school season, better-than-anticipated pricing trends, higher-than-expected share gains in industry unit demand and better-than-normal seasonality in Europe, the analyst says. The EPS estimate for 2008 has been raised from $1.80 to $2.41.

Michael, any comments from your side??
cheers
Oliver