A recent survey by The Online Investor (published by Forbes)
Western Digital Corporation
) has toppled
) to take over the #316 spot in terms of market
We believe that Western Digital is reasonably priced in the
$37.0 to $38.0 range. Further, it has the potential for some
upward movement considering the kind of benefits that it can
derive from the adoption of cloud computing. .
Companies across the world will prefer cloud computing as it
provides the cheapest option for data storage with quick access.
This data will be stored at an offsite server, which in turn
would require huge data storage capacity. Here lies the
opportunity for companies like Western Digital
, EMC Corporation
Seagate Technology Plc.
). Sensing this opportunity the company is making some marketing
moves to tap this opportunity.
Moreover, Western Digital is coming up with a host of hardware
and software solutions, which are particularly designed to make
storage easier and more readily available. Additionally, we
believe that after the acquisition of Viviti Technologies
(formerly Hitachi GST) for $3.9 billion in cash and 25 million
shares of the company, WDC has strengthened its foothold in the
data storage business. Although the brands compete separately in
the market, the deal should strengthen the company's revenue base
in the future.
On the other hand, the softness in PC demand may affect the
business. Although the company has been able to handle
competition efficiently, bigger players like Fujitsu Ltd, Samsung
and Toshiba pose considerable challenges.
Separately, the benefits achieved from higher ASPs due to
tight supply of hard disk drives (HDDs), resulting from the
disruption caused by the Thailand flood, are exhausting. This is
due to normalization of supply/demand metrics. This has been
reflected in the company's second quarter guidance, which is
sequentially weak. However, management believes that new product
launches, further cost optimization, strategic allocation of
capital and efficient execution will drive customers.
Currently, Western Digital has a Zacks Rank #3 (Hold).
EMC CORP -MASS (EMC): Free Stock Analysis
SEAGATE TECH (STX): Free Stock Analysis
WESTERN DIGITAL (WDC): Free Stock Analysis
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