Tue, Jan. 27, 4:17 PM
Tue, Jan. 27, 12:35 PM
- Micron (MU -3.6%), Nvidia (NVDA -3.4%), Seagate (STX -3.7%), and Western Digital (WDC -3.4%) have joined Intel and HP among the ranks of PC-exposed names off sharply in response to Microsoft's results and guidance. The Nasdaq is down 1.5%.
- The 13% Y/Y drops reported by Microsoft for Windows OEM Pro and non-Pro license revenue are getting a lot of attention, as is the fact Microsoft partly blamed the former on slowing business PC demand (also reported by IDC).
- Microsoft also stated non-Pro revenue was hurt by a mix shift towards cheaper PCs (typically feature cheaper processors, integrated GPUs, less DRAM, and smaller hard drives) for which Windows license fees are lower.
- Seagate and Western both tumbled yesterday due to the former's soft calendar Q1 guidance. Western reports after the close.
Mon, Jan. 26, 5:35 PM
Mon, Jan. 26, 10:00 AM
- In addition to slightly missing FQ2 revenue estimates (while posting in-line EPS), Seagate (NASDAQ:STX) has guided on its CC for FQ3 revenue of "at least $3.45 billion," unfavorable to a $3.59B consensus.
- FQ2 gross margin was 28.2%, +10 bps Q/Q but -40 bps Y/Y, and below (per Needham) a consensus of 28.6%. Seagate forecasts an FQ3 GM of 28.5%.
- Seagate estimates the addressable market (TAM) for hard drives was 144M-145M in FQ2, down from 147M in FQ1 and up from 142M a year earlier. The company pegs its share at 40%. Hard drive ASP fell by $1 Y/Y to $61.
- Two weak spots in FQ2: Consumer electronics hard drive shipments fell 9% to 6.1M, and branded drive shipments (high-margin) fell 3% to 6M. PC drive shipments rose 4% Y/Y to 36.6M, with notebook growth offsetting a desktop decline, and enterprise shipments (high-margin) rose 17% to 9.1M.
- $18M was spent on buybacks. Not counting a $620M gain recorded for an arbitration award, opex rose 6% Y/Y.
- Archrival Western Digital (WDC -7.2%) and hard drive assembly supplier Hutchison (HTCH -4.5%) are following Seagate lower. Western reports tomorrow afternoon, and Hutchison on Wednesday morning.
- Seagate's FQ2 results, PR, earnings slides (.pdf)
Mon, Jan. 12, 5:58 PM
- IDC estimates global PC shipments fell 2.4% Y/Y in Q4 to 80.8M - a bigger decline than Q3 and Q2's 1.7%, but better than expectations for a 4.8% drop. Gartner is more positive, estimating shipments rose 1% to 83.7M.
- Both firms observe emerging markets, where tablet cannibalization remains a major issue, remain in worse shape than developed markets. IDC also states commercial PC demand (boosted earlier this year by MSFT's ending of Win. XP support) has slowed, and that "market progress has been fueled by low-priced systems, including growth of Chromebooks and [Microsoft's] promotion of Windows 8 + Bing."
- On the bright side, both IDC and Gartner report Asia-Pac returned to positive growth, and that broader consumer demand is gradually improving. The U.S. consumer market is expected to return to positive growth in 2015, aided by slowing tablet demand and the Windows 10 launch.
- IDC believes all top-5 vendors gained share from rivals with less scale. A quarter after cracking the top-5 for the first time with a 6.3% share, Apple's (NASDAQ:AAPL) unit share is believed to have risen to 7.1% (+130 bps Y/Y) on the back of 4.9M shipments (+18.9%). Given higher ASPs, revenue share might be around 15%.
- Market leader Lenovo's (OTCPK:LNVGY) share rose 140 bps to 19.9%; #2 HP's (NYSE:HPQ) rose 300 bps to 19.7%; #3 Dell's rose 140 bps to 13.5%; #4 Acer's (OTC:ASIYF) rose 40 bps to 7.7%. Non-top 5 firms saw their share drop 740 bps to 32.2%, with their shipments declining 20.7%.
- Intel (NASDAQ:INTC), which tends to have good visibility into industry demand, reports on Thursday.
- Related tickers: AMD, NVDA, STX, WDC, HTCH
Tue, Jan. 6, 10:34 PM| Comment!
Dec. 15, 2014, 11:38 AM
- Western Digital's (WDC -0.4%) HGST division (formerly Hitachi's hard drive unit) has completed an all-cash purchase of Skyera, a maker of high-density flash storage arrays for enterprises and cloud service providers implementing scale-out data center architectures (quite popular among cloud firms).
- Terms are undisclosed. The Register's Chris Mellor suspects Western paid $400M or more for Skyera, which has raised $90M-$100M in funding over three rounds.
- Skyera's systems have won praise both for their high densities - the current-gen skyHawk FS can support 136TB of storage in a modest 1U form factor, and the next-gen skyEagle will support 500TB - and their ability to offer flash endurance levels with standard MLC NAND chips that typically require costlier eMLC chips. The startup has also developed a proprietary OS (known as SeOS) for its hardware.
- Western, like Seagate, has been responding to flash's ongoing share gains against hard drives by growing its flash exposure. Last year, the company bought PCI-e flash module vendor Virident, SSD vendor sTec, and SSD caching software startup VeloBit.
Dec. 9, 2014, 10:55 AM
- Western Digital (WDC +0.6%) says it has "successfully resolved two non-compliance matters with China's Ministry of Commerce" related to the regulator's requirement it keep what was once Hitachi's hard drive ops separate from Western's home-grown hard drive ops.
- The ministry has indicated to Western it is "now fully focused on considering Western Digital's application to lift the restriction," which was placed in 2012 as a condition for approving Western's purchase of the Hitachi unit.
- Shares are up slightly, and making new highs in the process. The Nasdaq is down 1%.
Nov. 6, 2014, 1:37 PM
- Hitachi is selling 5.4M Western Digital (NASDAQ:WDC) shares through a public offering, and giving underwriters a 815K-share overallotment option.
- The offering covers over 2% of WDC's outstanding shares; Hitachi obtained them through WDC's purchase of the company's hard drive unit.
- Assuming the overallotment option isn't used, Hitachi will have a 7.1M-share (3%) stake in WDC once the offering is complete.
Nov. 5, 2014, 6:43 AM
Oct. 28, 2014, 5:24 PM
- Western Digital (NASDAQ:WDC) guides on its FQ1 CC (webcast) for FQ2 revenue of $3.75B-$3.85B and EPS of $2.00-$2.10, below a consensus of $3.9B and $2.20.
- The oulook is overshadowing Western's FQ4 beat. Seagate (NASDAQ:STX), which moved higher yesterday following its FQ1 beat and slightly above-consensus FQ2 guidance, is following Western lower.
- FQ1 results, PR
Oct. 28, 2014, 4:17 PM
Oct. 27, 2014, 2:25 PM
- Seagate (STX +1.3%) guided on its FQ1 CC (transcript) for FQ2 revenue of $3.7B, slightly above a $3.68B consensus. The company expects a hard drive addressable market (TAM) of 145M units. The market totaled 148M units in FQ1, above initial guidance of 142M-146M.
- Gross margin is expected to rise slightly Q/Q, in spite of the margin pressured caused by the Xyratex and Avago deals. FQ1 GM was 28.1%, down 40 bps Q/Q and Y/Y. The acquisitions led opex to rise 20% Y/Y to $595M.
- $183M was spent to buy back 3M shares. Over the last 8 quarters, Seagate's share count has fallen by 59M to 327M.
- With the help of strong demand from Web/cloud giants, enterprise drive shipments (higher-margin overall) rose 9% Y/Y to 8.8M. Desktop drives -11% to 18.7M; notebooks +17% to 20.2M; consumer electronics -3% to 6M; branded drives (also higher-margin) +12% to 5.1M.
- Seagate pegs its FQ1 hard drive share at 40%, up from 38% in FQ4 and even with a year ago.
- Western Digital (WDC +1.4%) is getting a lift from Seagate's numbers; it reports tomorrow afternoon.
- FQ1 results, PR, earnings slides (.pdf)
Oct. 8, 2014, 5:09 PM
- IDC estimates global PC shipments were down 1.7% Y/Y in Q3 to 78.5M, better than an expected 4.1%. The decline is even with Q2's rate, and better than Q1's 4.4% and Q4 2013's 5.6%. Gartner estimates shipments fell only 0.5%.
- Developed markets continue faring better than emerging markets still getting hit by tablet cannibalization. IDC thinks U.S. shipments rose 4.3%, a bit slower than Q2's 6.9% growth. EMEA grew, while Asia-Pac (exc. Japan) declined. Japanese growth remained "deeply negative."
- The corporate migration from Windows XP to Windows 7 (following MSFT's ending of XP support) is still providing a lift, as is a soft tablet market. However, IDC cautions demand for "large commercial refreshes" remains low.
- Notably, Apple (NASDAQ:AAPL) finally managed to crack IDC's list of the top-5 global vendors: With the help of a strong U.S. market and Mac price cuts, Apple's unit share rose an estimated 60 bps to 6.3%. Revenue share is likely above 10%, given Apple's calendar Q2 Mac ASP was $1,255. U.S. unit share was at 13%.
- The four companies ahead of Apple all grew their shares as well, gaining ground against vendors with less scale: Lenovo (OTCPK:LNVGY) was at 20% (+230 bps), H-P (NYSE:HPQ) at 18.8% (+130 bps), Dell at 13.3% (+140 bps), and Acer (OTC:ACEIY) at 8.4% (+100 bps).
- Intel's (NASDAQ:INTC) Oct. 14 Q3 report should provide additional color on PC demand going into the holiday season.
- Related tickers: AMD, NVDA, MU, STX, WDC, HTCH
Oct. 8, 2014, 1:20 PM
- The Minnesota Supreme Court has upheld a $630.4M arbitration award levied against Western Digital (WDC +0.7%) over the theft of trade secrets by a former Seagate (STX +0.6%) employee. An appeals court ruled in Seagate's favor last year.
- Since the S.C. verdict can't be appealed, Western expects to pay the amount in full to Seagate, as well as interested accrued since Jan. 2012 (the date of the original award ruling). Western had "recorded an accrual of $758 million" for the dispute as of June 27.
- Western had $5.1B in cash and short-term investments as of June 27, and $2.4B in debt. Seagate had $2.7B in cash and short-term investments as of the same date, and $3.9B in debt. The award will be paid using offshore cash.
- Seagate reports on Oct. 27, and Western on Oct. 28.
Aug. 26, 2014, 2:35 PM
- Nine months after Western Digital (WDC +0.1%) became the first company to launch a 6TB hard drive, Seagate (STX -0.3%) has become the first to launch an 8TB drive.
- Like Western's offering, Seagate's drive is aimed at the high-capacity enterprise storage segment, which has been growing rapidly (and taking share from high-margin performance-optimized drives) thanks to strong demand from Web/cloud giants. The company promises "the best Watts/GB for enterprise bulk data storage in the industry."
- Unlike Western, Seagate (tight-lipped about technical details for now) isn't making use of helium to achieve high densities and low power draw. The company's shingled magnetic recording (SMR) tech might be leveraged. Seagate has promised SMR will enable 20TB drives by 2020.
WDC vs. ETF Alternatives
Western Digital Corp is a developer, manufacturer & provider of data storage solutions that enable consumers, businesses, governments & other organizations to create, manage, experience & preserve digital content. Its product include; HDDs and SSDs.
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