Western Digital Corp (NASDAQ: WDC ) is one of the top data storage companies in world, maintaining its position at data storage components have gotten faster, smaller and more ubiquitous. WDC stock has recovered from last June's three-year low, gaining almost 100%.
Established in 1970, it's one of the first-wave tech companies that helped launched what we now have come to see as ubiquitous computing. While a pioneer of hard drive memory, it has adapted to the times and in 2016 purchased leading flash memory maker SanDisk .
The difference between hard disk memory and flash drives basically comes down to equipment. When desktops and laptops were the hot commodities, hard drives were where you stored operating systems, software programs, etc.
The challenge was to get the most memory into the smallest space while making access to all the data on the disk. WDC continues to be one of the top producers of this kind of memory.
But in recent years, with the advent of cloud computing and portable devices like smartphones becoming the wave of the present and future, flash memory has become increasingly popular.
Memory in Your Hand
Flash memory is what underpins a thumbdrive, the memory cards for your camera, and the memory on your smartphone. Unlike hard disks, flash drives have no moving parts and can access data almost instantaneously.
Because hard disks have a lot of moving parts, they're much more difficult to make for portable devices. Flash drives are the engine that made mobile computing possible.
With the purchase of SanDisk, WDC became one of the leading makers of flash drives. And its partnership with Toshiba Corp USA (OTCMKTS: TOSYY ) meant it was working with another top flash memory maker.
Then things got messy at Toshiba, as some serious issues with the accounting in its nuclear energy division have put the whole company in jeopardy of shutting down. That has led the Japanese tech maker to seek a buyer for its flash memory division to raise capital to prevent a total collapse.
First in Line for Bid
The problem is, WDC owns the chip factory where Toshiba makes its memory. And WDC won't allow Toshiba to sell the memory business unless it has a seat at the table.
There were a handful of bidders for Toshiba, including WDC. On Wednesday, the Japanese Trade Ministry reached out to Western Digital regarding a Japanese government bid with Bain Capital , inviting WDC to join the consortium.
Bain is well known for its hard-edged turnaround style, so it's likely the Japanese want to know Toshiba is going to be ready to compete once all the mess is cleaned up.
This is likely a good thing for WDC stock, since it's the only tech firm of the three partners. Bain will look to make money on the turnaround and Japan will save a national icon. Neither have any real interest in running a tech firm.
That would position Western Digital first in line to make a bid for Toshiba's memory business, which would double its flash memory market share. Stay tuned.
Louis Navellieris a renowned growth investor. He is the editor of five investing newsletters:Blue Chip Growth,Emerging Growth,Ultimate Growth,Family TrustandPlatinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool,PortfolioGrader.com.
Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
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