Even worse, the company has failed to get its heads qualified for new programs during the first quarter, as originally expected. Although we're now in the third quarter, no new qualifications have been announced. Bad news with no sign of good times to come makes for surefire trouble. Hard drives include one to ten disks. A head flies just micro-inches above these disks, writing and reading data.
Drives require one head for each active disk side, so two to twenty heads per drive.
Demand for older inductive thin film heads peaked in the March quarter of '97, and the company has since been making the transition to MR technology, which has a higher storage capacity and allows for faster transfer rates. Vertically integrated drive makers Seagate and IBM were the leading MR head producers last year, with TDK and Yamaha not far behind and Alps coming on strong. Among independent head makers, Read-Rite is Applied's major competitor. Some have argued that Applied's hostile bid for Read-Rite was really an attempt to acquire that company's MR technology. Since Read-Rite itself has been heavily dependent on Western Digital and thus slower to transition from inductive heads to MR, such a theory would suggest Applied was having real troubles ramping its MR products.