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Mon, Feb. 8, 2:37 PM
- Many tech stocks are seeing 6%+ losses as investors flee to safety yet again. The Nasdaq is down 3.4%, and the S&P 2.7%.
- As was the case on Friday following Tableau and LinkedIn's disappointing guidance, a slew of enterprise tech stocks are seeing big losses, with cloud software and security tech names well-represented on the casualty list.
- Also: Solar stocks are having another brutal day (TAN -6.7%) as energy stocks get routed amid fears Chesapeake Energy is close to bankruptcy. WTI crude oil is once more near $30/barrel.
- Enterprise software decliners: Adobe (ADBE -9.6%), Paylocity (PCTY -19.1%), Salesforce (CRM -9.9%), Workday (WDAY -12%), Guidewire (GWRE -12.5%), ServiceNow (NOW -11.5%), Zendesk (ZEN -13.8%), Paycom (PAYC -13.4%), Marin Software (MRIN -10.3%), Castlight (CSLT -8.4%), Cornerstone OnDemand (CSOD -12.1%), Atlassian (TEAM -13.2%), inContact (SAAS -9.6%), and Bazaarvoice (BV -14.5%).
- Enterprise security decliners: Palo Alto Networks (PANW -12.2%), FireEye (FEYE -9.8%), CyberArk (CYBR -11.5%), Proofpoint (PFPT -12.7%), Qualys (QLYS -8.9%), Imperva (IMPV -9.7%), Rapid7 (RPD -9.4%), and Barracuda (CUDA -8.4%).
- Solar decliners: SunEdison (SUNE -11.3%), SunPower (SPWR -8.8%), JinkoSolar (JKS -7.6%), SolarEdge (SEDG -7.9%), Yingli (YGE -7.1%), TerraForm Power (TERP -10.7%), and TerraForm Global (GLBL -9.2%).
- Other major decliners: Micron (MU -9.1%), Western Digital (WDC -10.5%), Arista (ANET -10.9%), Universal Display (OLED -10.6%), Rackspace (RAX -11.3%), Fitbit (FIT -8.7%), Nimble Storage (NMBL -11.3%), Sierra Wireless (SWIR -9.9%), Rocket Fuel (FUEL -9.8%), Knowles (KN -9%), Mitel (MITL -8.9%), and Alarm.com (ALRM -8.9%).
- Previously covered: Yelp, Cognizant, Tableau, Globant, Ambarella, European tech stocks
Fri, Jan. 29, 10:25 AM
- With expectations low thanks to weak PC sales and soft enterprise server/storage demand, Seagate (STX +11.7%) has surged after beating FQ2 estimates and providing light FQ3 guidance. Likewise, archrival Western Digital (WDC +11.2%) is faring well after posting mixed FQ2 results (revenue missed, EPS beat) and guiding light.
- Guidance: Seagate has guided on its FQ2 call for FQ3 revenue of $2.7B, below a $2.85B consensus. Western guided on its call (transcript) for revenue of $2.8B-$2.9B and EPS of $1.20-$1.30, below a consensus of $3.23B and $1.46.
- Seagate details: Seagate's FQ2 EPS benefited from the repurchase of 2.9M shares at a cost of $107M. Non-GAAP gross margin was 25.6%, +140 bps Q/Q and -260 bps Y/Y, and within a 25.5%-26% guidance range.
Hard drive revenue fell 21% Y/Y to $2.73B; revenue from enterprise systems, flash, and other products rose 15% to $259M. Hard drive shipments fell 19% Y/Y to 45.9M, with average capacity rising 23% to 1.32TB.
- Western Digital details: Non-GAAP gross margin fell 40 bps Q/Q and 200 bps Y/Y to 28.5%; Western had forecast GM would be "slightly up" Q/Q, and is against guiding for a Q/Q increase. No shares were repurchased. Hard drive shipments fell 19% Y/Y to 49.7M; enterprise SSD revenue rose 44% to $270M. Western estimates the total market (TAM) for hard drives was 115.1M units, down from 118.7M in FQ1 and 140.8M a year ago. 35% of revenue was PC-related
Regarding Chinese firm Unisplendour's planned investment (15% stake) in Western, the company says it continues working with U.S. regulators (the CFIUS), and expects a decision in February. Meanwhile, the SanDisk acquisition (expected to see less regulatory scrutiny) is forecast to close in calendar Q2.
- Western also rallied yesterday after SanDisk (SNDK +4.7%) posted a healthy Q4 beat and issued soft Q1 guidance (expected given NAND price pressure and Apple's outlook) on Wednesday afternoon. For its part, SanDisk is up 9% over the last two days.
- Seagate: FQ2 results, earnings release, slides (.pdf).
- Western Digital: FQ2 results, earnings release, datasheet (.pdf).
Mon, Jan. 25, 3:08 PM
- Philips recently announced its has cancelled a $3.3B deal to sell an 80.1% stake in its Lumileds LED lighting unit to an Asian investment group led by Chinese fund GO Scale Capital. The cancellation follows objections from the Committee on Foreign Investment in the United States (CFIUS), and has sparked concerns about growing regulatory scrutiny of Chinese acquisitions - including deals in which the selling company isn't American.
- Synaptics (SYNA -8.1%), SanDisk (SNDK -11.1%), and Western Digital (WDC -4.5%) have all seen steep losses on a day the Nasdaq is down 0.6%. Synaptics soared last Wednesday after Bloomberg reported the company is getting closer to a deal to be purchased by a Chinese investment group for over $110/share.
- Western has a pending deal to sell a 15% stake to China's Unisplendour at a huge premium to current trading levels. The closing of that deal, meanwhile, affects the terms of Western's pending acquisition of SanDisk. Selling a 15% stake to a Chinese firm is, of course, is very different from allowing the firm to fully acquire a company.
- This morning, CLSA's Mark Heller downgraded SanDisk to Underperform, while citing weakening NAND fundamentals and the potential (given the selloff in Western's shares) for Unisplendour to walk away from the Western deal. He now sees a 25% chance the Western/SanDisk deal falls apart.
Fri, Jan. 15, 12:35 PM
- On a day the Nasdaq is off 4.1%, companies with strong PC exposure are seeing even bigger losses after Intel (down 9.2%) beat Q4 estimates and provided healthy 2016 sales guidance, but also reported a slowdown in server CPU sales growth and offered cautious earnings call remarks about Chinese demand and macro trends.
- Intel's Client Computing Group (provides PC/mobile CPUs) only saw a 1% Y/Y revenue drop in Q4 in the face of weak PC demand. However, volumes were down 16%, with desktop, notebook, and tablet CPU volumes respectively falling 9%, 10%, and 33%. A 17% increase in ASPs minimized Intel's revenue drop. Earlier this week, IDC and Gartner respectively estimated PC shipments fell 10.6% and 8.3% Y/Y in Q4.
- The list of PC-related names seeing big losses includes Microsoft (MSFT -4.8%), Nvidia (NVDA -6.7%), AMD (AMD -8.1%), HP Inc. (HPQ -5.2%), Micron (MU -8.9%), Seagate (STX -6.4%), and Western Digital (WDC -6.4%). AMD reports on Jan. 19, Microsoft and Western on Jan. 28, and Seagate on Jan. 29.
- In other Microsoft news, the company has carried out price cuts of up to 17% for Azure cloud computing services, following new price cuts from Amazon, and is reportedly looking to acquire Indian mobile ad network owner InMobi. Google was rumored to be in buyout talks with InMobi last year.
- AMD, meanwhile, has begun shipping its Opteron A1100 (Seattle) ARM server CPU. Seattle, first announced in 2013, sports up to eight 64-bit ARM Cortex A-57 CPU cores, and enters a market also targeted by AppliedMicro, Cavium, and Qualcomm.
Mon, Jan. 11, 6:19 PM
- Citing lower market multiples, Deutsche's Sherri Scribner respectively cut her Seagate (NASDAQ:STX) and Western Digital (NASDAQ:WDC) targets by $5 and $15 to $40 and $80. Nonetheless, Buy ratings were reiterated for both names - Scribner believes hard drive demand is stabilizing, and that Seagate/Western's valuations are attractive.
- RBC's Amit Daryanani estimated PC shipments from Taiwanese contract manufacturers (ODMs) fell 16% Y/Y in December, and deemed the figure "slightly negative" for Seagate and Western. He expects a soft 1H16, with potential improvement later in the year.
- Meanwhile, Taiwan's Economic Daily News reported notebook shipments from Taiwanese ODMs are expected to drop 15% Q/Q to 25M (seasonality will likely play a role), with volumes unlikely to recover prior to new notebook launches in Q2.
- Seagate fell 3.7% in regular trading; shares now trade for just 7.4x an FY17 (ends June '17) EPS consensus of $4.22. Western fell 4.7%; shares go for 7.2x an FY17 EPS (ends June '17) EPS consensus of $7.38.
Oct. 29, 2015, 1:15 PM
- Western Digital's (WDC +1.7%) FQ1 results were roughly in-line with the outlook provided in its Oct. 21 pre-announcement (provided while announcing the SanDisk deal). The company guided on its earnings call (transcript) for FQ2 revenue of $3.3B-$3.4B and EPS of $1.50-$1.60, below a consensus of $3.45B and $1.75.
- Western is nonetheless trading higher. Archrival Seagate (STX -2.9%), which issued an FQ1 warning on Oct. 15 (enterprise share loss to Western is believed to be the culprit) and reports on Friday morning, is selling off.
- Western's gross margin fell 90 bps Q/Q and 120 bps Y/Y in FQ1 to 28.9%; it's expected to rise "slightly" in FQ2. $60M was spent on buybacks; Western has said it will suspend its buyback (while keeping its dividend) on account of the SanDisk deal.
- Hard drive shipments totaled 51.7M - 15.8M notebook, 11.7M desktop, 11.5M consumer, 5.6M branded, 7.2M enterprise - up from 48.5M in FQ4 and down from 64.7M a year ago. 66% of revenue came from non-PC markets, up from 55% a year ago (the SanDisk deal will further increase that number). Enterprise SSD revenue was $233M vs. $244M in FQ4 and $156M a year ago.
- On the earnings call (transcript), Western noted demand for high-capacity enterprise hard drives (beloved by Internet giants) was "somewhat softer than anticipated" due to the "absorption of previously deployed storage assets." Regardless, it still expects a 35% enterprise capacity CAGR through 2020.
- The company echoes others in declaring it sees "some signs of stabilization" in PC demand. Ahead of the SanDisk deal (will boost Western's SSD share and lower its flash costs), Western also reports seeing "a very competitive market" in enterprise SSDs.
- Western's FQ1 results, PR, datasheet (.pdf)
Oct. 21, 2015, 8:00 AM
- SanDisk (NASDAQ:SNDK) +5.2% premarket after agreeing to be acquired by Western Digital (NASDAQ:WDC) in a cash and stock deal valued at ~$19B, confirming earlier speculation.
- The $86.50/share offer represents a 15% premium to yesterday's closing price for SNDK.
- WDC says the acquisition will double its market and expand its participation in higher-growth segments, and enable it to vertically integrate into NAND; CEO Steve Milligan will continue to serve as CEO of the combined company.
- WDC -3.1% premarket.
- Earlier: SanDisk beats by $0.29, beats on revenue
Oct. 19, 2015, 4:42 PM
- Six days after reporting SanDisk (NASDAQ:SNDK) has talked with Micron (NASDAQ:MU) and Western Digital (NASDAQ:WDC) about a potential sale, Bloomberg reports SanDisk is in advanced sale talks with Western.
- Negotiations are said to have "accelerated" over the weekend. A deal could be reached as soon as this week.
- Western has been viewed by analysts as a smoother fit than Micron, given it's not currently a NAND flash manufacturer - with many thinking Western needs to become one to insure itself against hard drive cannibalization by SSDs - and SanDisk and Micron respectively having NAND alliances with Toshiba and Intel.
- SNDK +8.3% after hours. WDC -3.1%. MU -1.3%. Micron joined SanDisk in rallying last week following Bloomberg's original report, fueled by expectations a deal would improve Micron's NAND scale and IP, and potentially lead to more favorable industry pricing.
- Earlier today: SanDisk gains following Korean site's M&A report
Oct. 19, 2015, 9:18 AM
- More than three years after Western Digital (NASDAQ:WDC) closed its acquisition of Hitachi's hard drive unit (HGST), China's Ministry of Commerce has approved integrating the business with Western Digital proper.
- The company will continue selling products under both the HGST and Western Digital brands, and maintain separate sales teams for two years. However, it plans to start integrating "corporate and other key functions, including [R&D], heads and media operations, engineering and manufacturing."
- HGST president Mike Cordano has been appointed to the newly-created position of COO. Western president Jim Murphy will now run the company's storage devices unit.
- Western is up 3.6% premarket. Archrival Seagate (NASDAQ:STX), hit hard last week by an FQ1 warning that some analysts argued indicates enterprise share loss to Western, is down 1.2%.
- Update (10:39AM ET): Western has given back its early gains. Seagate is down 2%.
Oct. 15, 2015, 9:17 AM
- Seagate (NASDAQ:STX) now expects to report FQ1 revenue of $2.9B vs. prior guidance of $2.9B-$3.1B and a $3.03B consensus. Unit shipments are expected to total 47M - up from FQ4's 45.3M but down from 59.5M a year ago - with Seagate maintaining a 40% share (implies a total market of 117.5M).
- Gross margin (non-GAAP) is now expected to be at 24%, below prior guidance of 27% and down from 27.2% in FQ4 and 28.1% a year ago. Seagate blames lower-than-expected demand for 4TB and 6TB nearline hard drives. An 8TB product was recently announced.
- FQ1 op. cash flow is expected to total $800M. 20M shares were repurchased.
- CEO Steve Luczo: "While Seagate had strong operating cash flows and made significant progress in cost containment in the September quarter, we are disappointed we did not execute a product portfolio that fully addressed the demand in the nearline market. Looking ahead, we are confident that our nearline product portfolio will be fully competitive by our fiscal third quarter."
- Full FQ1 results arrive on the morning of Oct. 30. Western Digital (NASDAQ:WDC), recently rumored to have held buyout talks with SanDisk, is following Seagate lower. Seagate also issued an FQ4 warning in July.
Oct. 13, 2015, 5:07 PM
- Sources tell Bloomberg SanDisk (NASDAQ:SNDK) is in talks with Micron (NASDAQ:MU) and Western Digital (NASDAQ:WDC) about a possible acquisition. No decision has been made.
- Acquiring SanDisk, which partners closely with Toshiba (OTCPK:TOSBF) on NAND flash manufacturing, would turn Micron (NAND partnership with Intel) into a heavyweight within the NAND market - Samsung and SanDisk/Toshiba are currently the market's biggest players. Micron received 32% of its August quarter revenue from flash, and 60% from DRAM. The company has been betting on 3D NAND and 3D XPoint to strengthen its flash position.
- Western has made several smaller flash-related acquisitions, as it tries to offset the gradual encroachment of SSDs/flash storage on hard drives. However, none of the buyout targets were comparable in scale to SanDisk, and Western still depends on 3rd-party NAND suppliers who also compete with the company in the SSD market.
- SanDisk +11.5% after hours to $68.90. Micron +2.6% to $18.65. Western +0.8% to $85.00.
- Earlier: SanDisk jumps on reported sale effort
Sep. 30, 2015, 12:43 PM
Sep. 30, 2015, 9:13 AM
Sep. 30, 2015, 7:23 AM
- China's Unis will pay $92.50 per share for a block of newly-issued Western Digital (NASDAQ:WDC) stock, and will own 15% of the company after the deal closes. Unis will also gain the right to put one of its people on the board.
- There's a five-year lock-up on the shares and Unis loses the board seat if its ownership stake falls below 10%.
- Shares +5.2% to $73.
Sep. 18, 2015, 11:48 AM
- Longbow Research thinks hard drive shipments have trailed PC shipments in 2015, making a positive inventory corrective possible. The firm considers expectations for a Q3 addressable market (TAM) of 115M units achievable - Western Digital previously estimated (.pdf) a Q2 TAM of 111M, down sharply from 138M a year earlier - and sees potential upside to 120M.
- Seagate (STX -1.9%) and Western Digital (WDC -3.3%) are nonetheless selling off on a day the Nasdaq is down 0.5%. Seagate is 8 days removed from announcing it's cutting 1,050 jobs in response to "the current macroeconomic business environment."
- Related ticker: HTCH
- Last week: Citi, Wells Fargo report seeing stabilizing PC demand
Jul. 30, 2015, 9:12 AM
- Gainers: UNXL +33%. UNIS +22%. MEET +18%. GEVO +17%. SHOP +15%. OTEX +15%. WWE +15%. SGYP +13%. SKX +12%. MWW +9%. HBP +8%. HOLX +8%. WDC +8%. APD +6%.
- Losers: PRSN -35%. LNCO -21%. LINE -19%. FMI -18%. SSYS -18%. ITG -14%. FOE -13%. WFM -12%. QRVO -12%. OSK -11%. LOCK -11%. DDD -9%. MNKD -7%. NCR -6%. GNCA -6%. FMS -5%. MPC -5%. CROX -5%.
Western Digital Corp is a developer, manufacturer and provider of data storage solutions that enable consumers, businesses, governments & other organizations to create, manage, experience & preserve digital content. Its products include HDDs and SSDs.
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