Digital Equipment Corp is considering bids of as much as $400m for its disk-drive business, analysts and industry executives told the Wall Street Journal – but the suprise is that while the company has negotiated with Seagate Technology Inc and Hewlett-Packard Co, Quantum Corp is said by people in the industry to have emerged as the most serious bidder. The suggestion that the Milpitas, California company wants the DEC Avastor business is a little surprising because Quantum is a design and marketing company, making only 10% of what it sells, contracting out volume manufacturing of 90% of its drives. On the other hand it is absent from the high end, which carries much higher margins, and that may account for the interest in the DEC business. Another attraction for Quantum is that DEC is a leader in magnetoresistive disk heads via its 81%-owned Rocky Mountain Magnetics Inc joint venture with Storage Technology Corp, which developed the technology; it has also just completed a new $25m drive plant employing 1,000 in Penang, Malaysia. As for Seagate, it has something like $1,300m available for acquisitions, but already offers the highest capacity drive of all with its 9Gb 5.25 drive.Any sale is expected to be confined to drive manufacturing and to exclude the disk array and subsystems integration business; about $500m of turnover is expected to go.
