Tag Archives: wdc

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.

PC Devastation Fuels Intel Jobs Slash, Hard-Disk Drive Crash

The sharp drop in PC sales that is the main reason Intel ( INTC ) will slash 12,000 jobs is also why the disk drive industry continues to get slammed. The two largest disk drive makers, Western Digital ( WDC ) and Seagate Technology ( STX ), for several years have tried to deftly maneuver through the dramatic drop in PC sales. Global PC shipments fell 9.6% in the first quarter, year over year, to 64.8 million units, according to research firm Gartner. It was the sixth consecutive quarter of declines and the first time since 2007 that quarterly shipments fell below 65 million units. Chips and disk drives have been two central elements in every PC since personal computers emerged about 35 years ago. Intel has moved to lessen its reliance on PCs by getting more chips placed in mobile devices, data centers and elsewhere. “We are evolving from a PC company to a company that powers the cloud and billions of smart connected and computing devices,” said Intel CEO Brian Krzanich, when the company reported fourth quarter earnings on Tuesday. Besides the PC drop, Seagate and Western Digital have been hit hard by the emergence of tablets and smartphones, which don’t contain disk drives at all. Seagate’s year-over-year revenue has decelerated for 10 of the last 12 quarters. The trend is similar at Western Digital. That is expected to continue when both companies report quarterly earnings next week. Weston Twigg, an analyst at Pacific Crest Securities, expects disk drive revenue to decline about 8% annually through 2020, he wrote in a research report Tuesday. Both companies have sought to battle through the onslaught by diversifying into other areas, mainly by investing in solid-state memory chips and the development of all-chip storage systems, called solid state drives. Twigg expects solid-state drives will represent about half of data storage drives by 2020. Western Digital is making a huge play in the solid-state storage market with its $19 billion acquisition of SanDisk ( SNKD ), a leading provider of flash-memory chips used in smartphones and tablets. The deal positions Western Digital as having one of the most complete lines of storage among all providers. The deal, though, is a big risk for two reasons — Western Digital is taking on lots of debt, and the flash-memory market is highly competitive with the potential for substantial overcapacity, Twigg writes. This includes competition from Intel, Micron ( MU ) , Samsung and Toshiba. The good news is that Western Digital will be well-positioned if data-intensive applications like artificial intelligence, robotics, and the Internet of Things drive substantially higher demand for data storage, with hard-disk drives creating the backbone of these systems, he said. These same trends could bolster Seagate, though the company has been far more cautious about entering the chip-storage arena than Western Digital.

Hard Drive Crash: Seagate Dives On Guidance, Western Digital Too

Seagate Technology ( STX ) stock plunged Thursday after the company released preliminary earnings late the previous day that were below its earlier guidance due to weak demand for its disk drives in servers and personal computers. Seagate stock crashed 20.1% to 27.11 in the stock market today , the lowest since late January. The news also hit Western Digital ( WDC ), which fell 6.65% to 41.82. Seagate and Western Digital are the two largest providers of disk drives. IBD’s Take: How healthy are shares of Seagate and Western Digital, and how do they stack up vs. rivals? Find out at IBD Stock Checkup Seagate expects to report revenue of about $2.6 billion, below previous guidance of $2.7 billion, for its fiscal third quarter. That would be a 21% decline year over year and the fifth straight quarterly decline. Seagate expects to report a non-GAAP gross profit margin of 23% vs. its previous guidance of 25.6%. Seagate attributed the shortfall to lower demand for disk drives in the business sector, as well as weaker demand for disk drives among China-based PC makers and the company’s decision not to aggressively participate in the low-capacity notebook market, among other reasons. Seagate will report its full earnings before the market open April 29. The company expects to report disk drive unit shipments of about 39 million, representing approximately 40% market share. Western Digital is scheduled to report its fiscal-third-quarter earnings April 28 after the market close.