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   Technology StocksWestern Digital (WDC)


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From: Carey Thompson2/23/2007 6:45:04 PM
   of 11057
 
Citigroup Stores Positive Impressions of Hard Disk Drive Makers, Posts Upgrades

Friday February 23, 2007 7:39 am ET

NEW YORK (AP) -- A Citigroup analyst on Friday lifted ratings on two hard disk drive makers, citing improving fundamentals for the industry.
Analyst Paul Mansky in a client note said inventory levels and pricing for hard disk drives are improving.

He lifted ratings on computer memory and data storage maker Western Digital Corp. and on Xyratex Ltd., a British maker of computer storage systems, to "Buy" from "Hold."

In addition, Microsoft Corp.'s launch of its new Vista operating system could boost demand for PCs and data storage devices, noted Mansky.

The analyst raised his target price on Western Digital to $24.50 from $21, saying the company appears to be working down high inventory that concerned investors in the past..

WDC closes up .86 to $20.15 on the news

Mansky raised his target price on Xyratex to $27 from $21, saying visibility and fundamentals have begun to improve from recent weakness.

He kept a "Buy" rating on San Jose, Calif.-based Komag Inc. -- with a $40 target price -- and a "Hold" rating on Scotts Valley, Calif.-based Seagate Technology. He said the company's operating margin improvements are reflected in share price.

Mansky lifted his target price on Seagate to $32 from $24.50.

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From: Carey Thompson5/20/2007 1:03:52 PM
   of 11057
 
Death of disk-drive business unfounded: Barron's
Sunday May 13, 2007 12:50 pm ET

NEW YORK (Reuters) - Reports of the disk-drive business' demise have been greatly exaggerated, according to a report in Barron's.
Since the beginning of the year, the No. 1 and No. 2 drive makers -- Seagate Technology (NYSE:STX - News) and Western Digital (NYSE:WDC - News) -- have seen their stocks decline on worries that personal-computer sales are slowing substantially, Barron's noted in its May 14 edition.

Some analysts have even suggested that the newer kind of computer chip known as "flash" memory could completely replace drives in personal computers -- and put Western and Seagate out of business, Barron's said.

biz.yahoo.com

But PC sales are doing just fine, and flash -- in great part owing to its cost -- is not going to replace disk drives globally for years to come, Barron's said.

Once investors come to appreciate those facts, Western Digital shares could appreciate another 20 percent or more from a recent price of $18.10 per share, Barron's said.

Western is cheaper than Seagate by a wide margin, trading at a two-year-low price-to-earnings multiple of about 9.4 times the next four quarters' estimated profit per share -- below its five-year median of 11.6 times, while Seagate is near its median of 12.2 times.

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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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To: Sarmad Y. Hermiz who wrote (11000)5/23/2007 12:28:43 PM
From: w0z
   of 11057
 
Sarmad I know you have closely followed WDC and STX in the past. What do you think about them now? WDC seems to have a much more reasonable valuation but maybe there's a reason it's lower.

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From: Carey Thompson7/7/2007 11:23:06 PM
   of 11057
 
Recently, I was in Orange County for a wedding. While there I discovered my (Paris) Hilton Hotel, was around the block from the world headquarters of Western Digital, WD. An aside, this part of Orange County was hills and a rock pit when I was a boy - there was no such thing as a Lake or a Forest back in the day. Now there's a man made lake and a bunch of recently planted eucalyptus trees.

Anyway, I decided to drop in and ask the guys at work "How is business?" This was not a good idea because the place was all but closed down for the 4th of July week. I talked to the receptionist who was very friendly. But she was a short timer and did not know much about business. I had a bunch of questions about the Komag acquisition, the new CEO Coyne, where are the disk made, is the new 1.5 tredabyte disk selling. But there was no one home. Oh well, I get to southern California every 20 these days and I will have to visit WD next time I am in town.

To get some value from the trip to WD, I stopped at the Ross store and bought a new RED Los Angeles Angels T-shirt.

BTW, when did all these toll roads come to southern California?

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To: Carey Thompson who wrote (11019)11/1/2007 7:15:38 PM
From: Carey Thompson
   of 11057
 
Western Digital Fiscal 1Q Profit Falls
Thursday November 1, 6:35 pm ET
Western Digital Fiscal 1st-Quarter Profit Falls 33 Percent Due Mainly to Hefty Tax Charges

LAKE FOREST, Calif. (AP) -- Western Digital Corp. on Thursday said its fiscal first-quarter profit fell 33 percent due mainly to hefty tax charges, but the hard drive maker's results still beat Wall Street estimates.
For the quarter ended Sept. 28, the company reported net income of $69 million, or 31 cents per share, compared with $103 million, or 46 cents per share, in the year-ago period.

Excluding nonrecurring tax charges, Western Digital reported a profit of 58 cents per share in the recent quarter, and excluding acquisition-related charges, profit totaled 81 cents per share.

Revenue jumped to $1.77 billion from $1.26 billion.


Analysts polled by Thomson Financial expected a profit of 57 cents per share on revenue of $1.66 billion.

Shares of Western Digital rose 10 cents to end the regular trading session at $26.02.

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From: Carey Thompson2/26/2008 6:37:40 AM
   of 11057
 
Here is a good article on the new products and improved profitability at WDC.

biz.yahoo.com

Investor's Business Daily
Once Conservative And A Follower, Hard Drive Maker Takes The Lead
Thursday February 21, 6:02 pm ET
Brian Womack

For Western Digital, the follower has become the leader.
The hard drive maker (NYSE:WDC - News) once known for keep-it-steady conservatism is suddenly the sexiest stock in the hard-drive industry with cutting-edge technology and sleek consumer products.

"It's really a manifestation of a philosophy change," said Mark Geenen, an analyst with Trend-FOCUS. "They've really remade the company."

Earlier in the decade, the company had a reputation as a "fast follower" -- letting competitors ramp up technologies to test demand. But that changed last year after Western Digital was the first to market with a massive hard drive for laptops, beating rival Seagate Technology (NYSE:STX - News). Thanks to some key acquisitions, the company is looking to hold its technology edge as it continues to grab share in markets it once ignored.

"WD (Western Digital) is capitalizing on growth opportunities through thoughtful strategies, which we have executed very effectively in recent years," said John Coyne, president and chief executive of Western Digital during the company's last quarterly analysts' call. "WD's positioning has never been better."

Earnings Growth

Western Digital's adjusted earnings more than doubled to $1.35 per share in the second fiscal quarter ended Dec. 28, 2007, from the year-ago period. That crushed analysts' estimates by 30%, even after the company had raised guidance in early December.

Sales shot up more than 54% in the recent quarter to more than $2.2 billion.

Western Digital is benefiting form solid demand for gear to store the exploding amount of digital content in homes and businesses. Hard drives store information for computers, digital video recorders and other devices.

Meanwhile, the industry has been careful to restrain production capacity growth, keeping long-standing fears of price wars at bay.

"While there may be concern about the impact of macroeconomic conditions on demand for storage, we have yet to see any effect on actual usage or order rates or the forecasts from our customers," Coyne said during the call on Jan. 23.

However, Christian Schwab, an analyst with Craig-Hallum Capital Group, says the company is entering a typically tough part of the year for the hard drive industry. At the same time, economic concerns could still be a drag on the industry.

"There seems to be increasing questions about the ... economic environment," said Schwab, who rates Western Digital a buy.

Still, Mark Miller, an analyst with Brean Murray Carret & Co., says demand is still looking solid. He notes there could be shortages of some key hard drive parts this year. He expects the hard drive industry to grow 10% to 15% annually over the next three years, based on unit shipments.

"You're still seeing some solid growth," he said.

Western Digital is better positioned for any potential downturn now that it's beefed up its in-house technology.

Back at the beginning of the decade, the company worked with outside providers to get key parts that make up the guts of a hard drive.

"They were basically an assembler of other people's technologies," Geenen said.

The company took an important step toward changing that in late 2003 when it bought Read-Rite, a company that had fallen into bankruptcy. It made the heads in a drive that read and write information on the spinning storage discs -- sort of like a two-way record needle.

The other big acquisition came just last September, when the company spent $1 billion on Komag, which makes the media, or the spinning discs that store information.

With these two technologies in-house, Western is on par with market-heavyweight Seagate, analysts say. The acquisitions also pad profit margins. For example, Komag could add another 3 percentage points to its already expanding gross margins, the company says.

Schwab says the moves "should allow them to bring future products faster to the market."

Western Digital already was doing that in the key laptop market.

Geenen points out that the company was the first to introduce a laptop drive last spring that offered 250 gigabytes of capacity at a time when most hard drives were at less than 200. In the fall, Western Digital was the first to market with a 320 gigabyte drive.

Schwab notes Seagate should close the technology gap later in the year.

These drives haven't just been popular among a handful of geeks, but has helped fuel market share growth.

Its 2.5-inch hard drives, which are designed to fit inside laptop computers, grabbed 20% of the laptop market in the fourth quarter of 2007 compared with just 15% share in the third quarter, according to TrendFOCUS.

Not bad for a company that didn't even enter the hard-drive laptop market until 2004 -- a time when the market was beginning to show huge growth as more computer users went mobile. The market for laptop hard drives showed year-over-year unit growth of 47% in the fourth quarter and 8% sequential growth.

"They have taken the leadership mantle away for their competitors," Geenen said. "Twelve to 18 months ago that was almost unthinkable."

But this wasn't just all Western Digital's doing.

Price War

Earlier in 2007, Seagate, which had been on the technology forefront for most of the decade, pulled back on research spending on higher-capacity hard drives. There were growing fears of yet another industry price war, and Seagate didn't want to overspend at a time that its margins could shrink. But a drawn-out price war never materialized, leaving Western Digital in the driver's seat.

"It was just an opportunity for (Western Digital)," Miller said.

Western Digital isn't just leaving it to computer companies to target consumers. The company has found a hit with its "My Book" and "My Passport" external hard drives -- whose names reflect their sleek appearance. They target people who need extra hard drive space to back up digital files, such as movie clips and songs.

Two years ago these branded products made up just 5% of overall sales. Today, they make up 18% of hard drive revenue.

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To: Sarmad Y. Hermiz who wrote (11000)5/16/2008 1:11:42 PM
From: Sam Citron
   of 11057
 
Hi Sarmad,

I notice that WDC is on the cusp of hitting decade-long highs but the thread is moribund. Also have noticed that STX has been much weaker relative to WDC. Just wondered whether you still had an interest in these stocks and what you thought of the action and the general lack of interest here.

Sam

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To: Sam Citron who wrote (11022)5/16/2008 1:46:58 PM
From: Sarmad Y. Hermiz
   of 11057
 
Hi Sam,

In the past few days I bought a large position in STX (from $19 to $21). I think STX is extremely undervalued. I expect it to go to $30. Regarding WDC, it is doing very well financially. But I think the stock price reflects that already.

Same thing happened two years ago. WDC stock appreciated first, then was followed by STX. Don't know why STX lags. It used to be the opposite. I think institutions are short on large tech stocks. WDC might be too small for inst to bother with. Individual traders love it though.

I still have a large position in Intel.

This is something I posted re STX a couple days ago, before latest run-up.

(last paragraph).

siliconinvestor.com

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To: Sarmad Y. Hermiz who wrote (11023)5/16/2008 3:06:47 PM
From: Sam Citron
   of 11057
 
Thanks, Sarmad. I knew you would be all over this. I also have a feeling STX should be playing catch-up and have been buying lately.

Do you have a sense of where these companies can profitably deploy their extra cash, other than share repurchases?

Sam

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