The firm has barreled ahead with its strategy of expanding its market-making presence.

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The combination would accelerate Seagate's growth strategy in the expanding consumer storage market, particularly in Europe and Japan, and add strong engineering and software development capabilities, as well as relationships with several key retailers.

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We believe management is running the business essentially at break-even as a matter of design while the company reaches for ever-expanding market share, and we think marginal investors will continue to lose patience with this strategy in the medium term.

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Expanding capacity by issuing convertibles can be a risky strategy and lead to extreme heartbreak and red ink if mistimed, but expanding into an improving market can help propel results in a slingshot fashion.

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