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Western Digital Starts New Era As SanDisk Acquisition Completed

Western Digital ( WDC ) completed its $16 billion acquisition of SanDisk, creating a formidable competitor in both disk drives and flash-chip storage. SanDisk is a leading provider of chips used for data storage in a wide variety of devices, including smartphones, tablets and PCs. The deal will help SanDisk, which has a strong retail business, move up the ladder to make bigger sales to businesses and other enterprise customers, the market where Western Digital is strongest. Western Digital gets the ability to offer chip-based storage in areas where its disk drive technology is losing ground. Western Digital didn’t provide updated guidance with its announcement of the deal’s closure. “This is disappointing, as the company indicated on its earnings call, perhaps unintentionally, that it planned to provide updated June guidance when the deal closed,” Pacific Crest Securities analyst Weston Twigg wrote in a research note. Western Digital did say that it would provide guidance in the “near term.” Twigg said Western Digital should remain well positioned in its core hard disk drive business, though disk drive revenue will decline over the next five years as non-volatile memory and software-optimized storage products gain. “Western Digital’s acquisition of SanDisk should help position it for these shifts,” Twigg wrote. Western Digital and SanDisk had combined revenue of about $20 billion in 2015. Western Digital is the largest provider of disk drives, ahead of Seagate Technology ( STX ). “This transformational combination creates a media-agnostic leader in storage technology with a robust portfolio of products and solutions that will address a wide range of applications in almost all of the world’s computing and mobile devices,” Western Digital CEO Steve Milligan said in Friday’s  press release  announcing the acquisition had closed. Sanjay Mehrotra, co-founder and CEO of SanDisk, will serve as a member of the Western Digital board of directors. Western Digital stock was down 2.5%, near 35, in late-afternoon trading in the stock market today , at a more than three-year low. Seagate stock was up 1.5%, near 19, after touching a four-year low on Thursday.

Acacia Communications Bolts, Giving Silent Tech IPO Market A Jolt

The tech IPO market remains in the doldrums, but it got a spark with Acacia Communications ( ACIA ), which turned in a strong debut on its first day of trading Friday. For its initial public offering, Acacia priced 4.5 million shares at $23 a share, the high end of its estimated range, raising $104 million. In afternoon trading in the stock market today , Acacia stock was above 31, up 35%, on volume of more than 3 million shares. The company makes chips that boost the speed and performance of optical communications networks used by cloud infrastructure operators and other content service providers. Its products include low-power digital signal processors that are application specific. It also makes silicon photonic chips that help facilitate data speeds of up to 400 gigabits per second, for use in data centers. It is also developing optical interconnect modules that will enable transmission speeds of 1,000 gbps and more. “We believe we are leading a disruption that is analogous to the computing industry’s integration of multiple functions into a microprocessor,” the company said in its IPO prospectus . The Maynard, Mass.-based company has grown rapidly. Revenue rose 64% in 2015, to $239 million. It reported 2015 net income of $40.5 million, up from $13.5 million in 2014. First-quarter revenue rose 78% to $47.2 million, with net income of $14.6 million. Acacia has about 25 customers, of which the top five account for about 83% of revenue. Its largest customers are ADVA Optical Networking North America, ZTE Kangxun Telecom, Coriant, and Alcatel-Lucent, it says in its IPO prospectus. Competitors include  Cisco Systems ( CSCO ), Broadcom ( AVGO ), Finisar ( FNSR ) and Ciena ( CIEN ).  

Sunrun Dogged By ‘Regulatory Flux’ But Tops SolarCity, Eyes Growth

Sunrun ( RUN ) is outperforming top rival SolarCity ( SCTY ) but will have to ramp up in the second half of 2016 to defeat regulatory flux in California, New Hampshire, Massachusetts and Hawaii that threatens its 40% growth view, Credit Suisse said Friday. Sunrun stock rocketed 8% in early afternoon trading on the stock market today , helping to pull SolarCity stock up more than 1% in the process, after Sunrun late Thursday  crushed Q1 expectations . It reported $98.7 million in sales, up 99% from the year-earlier quarter, and 13 cents earnings per share. Wall Street consensus modeled $87.7 million and a 48-cent per-share loss. The No. 2 residential installer beat rivals SolarCity and Vivint Solar ( VSLR ) to profitability. On Monday, SolarCity and Vivint Solar separately reported year-over-year sales growth, but also posted per-share losses that widened. All three are dogged by the same regulatory environment, but Sunrun is faring the best, Credit Suisse analyst Patrick Jobin said Friday in a research report. Jobin retained his outperform rating and 18 price target on Sunrun stock, which was trading near 6.50 Friday afternoon. During Q1, Sunrun deployed 60 megawatts, up 63% year over year, vs. 40% and 19% growth for SolarCity and Vivint Solar, respectively. SolarCity’s Q1 bookings fell 33% vs. the year-earlier quarter to 160 MW. Sunrun’s Q1 bookings rose 46%, also topping Vivint Solar’s 33% growth. To achieve its 40% growth target for 2016, Sunrun will need to pick up the pace in the second half of the year, Jobin wrote. For the year, Sunrun expects 285 MW in deployments, including 60 MW in current-quarter guidance. Jobin, though, expects 271 MW in deployments, up 34%. “Management is clear that the guidance is attainable, but not necessarily easily attainable,” he wrote.