Inside Wall Street
WHAT'S REVVING UP DISK DRIVES
For a 50-year-old company that once dominated the market for TV gear, Ampex (AXC) is having a long overdue rebirth. Its shares, languishing at 3 to 4 in January, have zoomed to nearly 12. The big push came in April when investors got wind of the company's proprietary technology called "keepered media," which increases the speed and data-storage capacity of hard-disk drives.
One San Francisco manager thinks the stock will go even higher when orders for keepered technology roll in. That may not be the only thing pushing the stock up: This investor thinks Ampex is an attractive takeover target for one of its potential customers currently testing keepered media.
He says that the technology is being tried out by major disk-drive makers, including Seagate Technology, Western Digital, and Quantum. He believes one of them will try to acquire Ampex. There are about eight big makers of hard drives, three of them foreign-owned. Ampex will confirm only that it has signed nondisclosure pacts with four makers, three U.S. and one foreign.
CEO Ed Bramson says that, if initial test results are confirmed, it means the advantages of using keepered media in disk drives "will be quite significant." But he notes Ampex hasn't yet received any orders for it.
Eric Appell, an analyst at the securities firm Dabney Resnick, says the response from major disk-drive makers has been favorable. Another analyst, Kenneth Trbovich of The Red Chip Review says keepered media could be used as an "intermediate technology" with current inductive disks and in future generations of disk drives.BY GENE G. MARCIAL