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Hutchinson Technology says they're going to make it

|Includes:Hutchinson Technology Incorporated (HTCH), STX, WDC

I wrote Huthchinson Technology (NASDAQ:HTCH) up favorably http://seekingalpha.com/article/107510-hutchinson-technology-20-book-value-2-share-price at 2.05.  The stock got up as high as 4.15 today and I am claiming a doubler. 

Hutchinson makes head suspensions for disk drives, customers include Western Digital (NYSE:WDC) and Seaqate (NASDAQ:STX), although Seagate will be dropping them.  As the economy crashed taking tech with it the company got into a struggle for survival, at least in the sense of continuing as a meaningful bit player in the disk maker category. 

I thought it was a good play based on tangible book value of over 20 per share.  Following operating losses and writeoffs that number is more like 12 per share.  That is a problem that I have encountered frequently on these book value ploys, assets can dissipate rapidly in the face of losses. 

As of their last conference call, available here on S-A, the company says they are resuming their plans to open an assembly operation in Thailand at a cost of 10 to 15 million, because they are now confident of their financial situation.  I take this as a statement that management believes they are going to make it, otherwise why waste money on capex.  

The company has about 5 more in cash per share than is needed for normal operations.  If the business starts operating viably I think the shares are worth about 15.  Western Digital according to their 10-K beleives in vertical integration.  They bought Komag when that company got into trouble.  So there is a chance WDC might be interested in acquiring HTCH. 

Taking all of this together I am going to hold HTCH and look for further gains.

Disclosure: long HTCH and WDC, short STX

Stocks: HTCH, WDC, STX