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Technology Stocks : Western Digital (WDC)
WDC 57.52+1.0%Dec 3 4:00 PM EST

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From: Carey Thompson5/20/2007 1:07:01 PM
   of 11057
 
Stocks for Mom: Western Digital

Matt Koppenheffer
May 9, 2007

fool.com

The Motley Fool crew is no ship of fools. We're putting Mom first, and so should you. Check out all of the Fool's Mother's Day articles.

Approaching Mother's Day, I can't help but think about all the great things my mother has done for me. Feeding and clothing me for my entire childhood comes quickly to mind -- and don't think for one minute that I don't appreciate that. If my parents had taken the money they spent on my needs and invested it, the magic of compounding would likely have them retired in Florida by now. Throw in the same for my brother and sister and you've got a pretty comfy cash stash.

So why would I reward my mother's attention and care with a somewhat stodgy technology stock like Western Digital (NYSE: WDC)? Well, my mom always gave me this bit of advice: Find something you love to do, and you'll never feel like you're working. For me, that advice led me out of the world of investment banking and private equity and to the Fool. For my mom, it has very recently led to the decision to start a new venture in the area of photography.

Storing it
Photography notwithstanding, don't expect me to bring up Eastman Kodak (NYSE: EK) -- I love my mom too much for that! And the field of digital camera manufacturers -- which includes the likes of Nikon (her current preference), Hewlett Packard (NYSE: HPQ), and Sony (NYSE: SNE) -- is still way too crowded for me to get into. I could talk about Apple (Nasdaq: AAPL) here, since Apple computers are very often the choice for people working with digital images and video, but Mom is sticking with the Microsoft (Nasdaq: MSFT) OS.

As she moves forward with her digital photography venture, having ample storage -- and backup storage on top of that -- will be crucial. And this extends beyond the photos she will take in her new business. For years she has been taking family pictures on digital media, and she has been converting older collections of photos and videos to digital. As she builds her business, she'll also have marketing materials, financial documents, and customer communications to deal with, much of which will be in digital format and will need to be stored and backed up.

The need for oodles of storage is far from unique. Whether it's socking away digital photos, managing a collection of music in MP3 format, handling digitized medical images in a hospital, or transferring video over the Web, the need for a place to store bits and bytes is ubiquitous.

Western Digital in the sandbox
I'll admit that hard disc storage is not the most attractive industry, and it's certainly far from the sexiest. Hard discs, though, are still the primary mode of storage in the digital world, and as more firms focus on hotter areas, there are fewer and fewer companies competing for those hard-disc dollars. Recently, Seagate Technologies (NYSE: STX), a primary competitor to Western Digital, bought out Maxtor, another major player.

This leaves Western Digital in a good position. Maxtor was in bad shape when Seagate picked it up -- it was unprofitable and burning cash. The acquisition will undoubtedly improve Seagate's position, but it will take a while to integrate Maxtor and get its operations in line, and there's no guarantee what the company will get from it in the end. Meanwhile, Western Digital will also benefit from the exit of a competitor, and it won't be dealing with the integration of a major acquisition. And even with Seagate's now larger operations, the OEMs to whom hard disc drive manufactures sell are loath to tie themselves to a single supplier for fear of a supply interruption.

Happy Mother's Day!
So, tying this all together, I wish my mom all the best with her new venture and remind her that she knows someone to call when it's time to pick out some backup storage for her photos. And, of course, I wish her (and all of the other moms out there!) a very happy Mother's Day.

Microsoft is an Inside Value pick. You -- or your mom -- can check out any of the Fool's newsletters with a 30-day free trial.

Fool contributor Matt Koppenheffer has a camera somewhere, but can't seem to get himself to take any pictures. He does not own shares of any of the companies mentioned. The Fool's disclosure policy has no mother, but can still wish all the moms out there well!
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