Thu, Jul. 30, 9:12 AM
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Wed, Jul. 29, 6:39 PM
- Western Digital (NASDAQ:WDC) has guided on its FQ4 call for FQ1 revenue of $3.2B-$3.3B and EPS of $1.50-$1.60, below a consensus of $3.5B and $1.76. However, a light outlook was expected following Seagate's warning and a deluge of soft PC data.
- Western has risen to $83.11 AH. Seagate (NASDAQ:STX) has risen to $50.74 ahead of Friday morning's FQ4 report.
- Western's FQ4 results, PR
Mon, Jul. 6, 9:53 AM
- Cautious Cleveland Research remarks about near-term hard drive demand have led Seagate (NASDAQ:STX) and Western Digital (NASDAQ:WDC) to slump out of the gate. The Nasdaq is down 0.4%. This isn't the first time a downbeat Cleveland note has had such an effect.
- Seagate/Western fell two weeks ago after JPMorgan downgraded Western to Neutral, while citing weak PC sales. Both companies also sold off a few days later thanks to Micron's results/guidance.
Fri, Jun. 26, 8:20 AM
- Intel (NASDAQ:INTC) is down 1.7% premarket, Seagate (NASDAQ:STX) is down 1.4%, and Western Digital (NASDAQ:WDC) is down 1.1% after Micron (down 15.1%) missed FQ3 estimates and provided soft FQ4 guidance, while largely blaming PC weakness and its impact on DRAM prices. SanDisk is also off.
- Intel, Seagate, and Western have already seen a decent amount of PC-related concerns priced in. The industry is counting on Windows 10 (launches on July 29) and Intel's Skylake CPU platform (expected to begin rolling out in late summer) to spark a rebound.
Thu, Jun. 25, 5:35 PM
Tue, Jun. 23, 3:59 PM
- Western Digital (NASDAQ:WDC) fell below $89 in regular trading following a morning JPMorgan downgrade to Neutral, and has once more pulled archrival Seagate (NASDAQ:STX) in the same direction.
- JPMorgan's Rod Hall cites weak PC sales as his reason for downgrading Western. "We continue to see little evidence of an improvement in PC fundamentals. We also note negative comments on PC demand from HP, Avago, and Micron over the last month." Oddly, he suggests Intel's Skylake CPU launch (expected to start in late summer) is another reason to be pessimistic, arguing it will, if anything, push out a seasonal demand pickup.
- Hall now expects industry hard drive shipments to fall 10.2% in 2015 to 507M, and 2.3% in 2016 to 495M. ASPs are expected to rise from $58.6 in 2014 to $60.1 in 2015 and $61.2 in 2016, thanks to a mix shift towards costlier enterprise/cloud drives.
- Goldman upgraded Western to Buy in late May, while estimating PCs will only account for 38% of 2015 revenue.
Thu, May 28, 9:49 AM
- Believing its current valuation doesn't take into account strong enterprise/cloud demand, Goldman's Bill Shope has upgraded Western Digital (NASDAQ:WDC) to Buy, and hiked his target by $16 to $122. As is often the case, Seagate (NASDAQ:STX) is going in the same direction as Western.
- Shope: "We estimate that PCs will represent 38% of Western Digital's revenue in CY2015, down from nearly 70% in CY2007. As a result, PC volatility is not nearly as big of a driver of fundamentals as it once was." He forecasts PC-related shipments (hurt by both soft PC sales and SSD encroachment) will see a -9% CAGR from 2014-2016, and that enterprise shipments (lifted by cloud/analytics demand and Western's flash storage offerings) will see an 8% CAGR.
- Western currently trades for 12x estimated FY16 (ends June '16) EPS. Seagate goes for 11x estimated FY16 (ends June '16) EPS.
Tue, May 19, 12:11 PM
- FBR's Chris Rolland, after talking with Intel (INTC -1.2%) IR chief Gary Willihganz: "While excess PC inventory dynamics were well known exiting 2014, we believe many investors did not expect additional PC inventory drain into the Win10 release. Intel was careful to explain these nuanced inventory dynamics, which we believe may have also been a contributor to the weaker-than-expected ODM shipments witnessed in April."
- Rolland adds that while Intel "expects inventory replenishment in 2H15 around the Win10 release, it was careful to temper expectations for a surged uptick in demand." A Q1 CC remark from AMD CEO Lisa Su suggested Windows 10 (NASDAQ:MSFT), whose Start menu and enterprise-friendly features could help boost industry demand, will launch in late July.
- Also: Morgan Stanley says it's cautious on PC names in the near-term (moreso on chipmakers than other firms) given soft Q2 PC/hard drive inventory builds and weak April sales from ODMs. It sees normal seasonal growth following a rough Q1, and doesn't expect a recovery occurring before Q3.
- Micron (MU -2.1%), Seagate (STX -3.3%), and Western Digital (WDC -1.5%) are lower on a day the Nasdaq is near breakeven. Micron, which is close to its 52-week low, fell on Friday after Nomura cut estimates on PC DRAM pricing fears. Microsoft is down 0.7% after factoring its dividend payment (shares are trading ex-dividend today).
Tue, Apr. 28, 6:33 PM
- In addition to missing FQ3 estimates, Western Digital (NASDAQ:WDC) has guided on its CC for FQ4 revenue of $3.3B-$3.4B and EPS of $1.50-$1.60, below a consensus of $3.64B and $1.92. Not surprisingly, much of the blame is placed on weak PC sales.
- FQ3 gross margin (non-GAAP) was 30.1%, down 40 bps Q/Q and flat Y/Y. Western has set a broad FQ4 GM guidance range of 27%-32%. Operating expenses fell 2% Y/Y to $591M, and $240M was spent on buybacks.
- Desktop hard drive shipments fell by 3.1M Y/Y to 13.5M, and notebook drives by 3M to 18.8M. Enterprise drives (high-margin, lifted by Web/cloud demand) rose by 400K to 7.5M; branded drives (also high-margin) fell by 100K to 6.1M; consumer electronics drives rose fractionally to 8.6M.
- Western estimates the total addressable market (TAM) for hard drives fell to 125M from FQ2's 140.8M and the year-ago period's 138.1M. 60% of revenue came from non-PC products, up from 53% a year ago. Enterprise SSD revenue rose to $224M from FQ2's $187M and the year-ago period's $134M.
- Shares have fallen to $94.50 AH. Seagate provided light guidance 11 days ago.
- FQ3 results, PR, datasheet (.pdf)
Fri, Apr. 17, 11:00 AM
- In addition to missing FQ3 revenue estimates (while beating on EPS), Seagate (NASDAQ:STX) has guided on its CC (webcast) for FQ4 revenue of $3.2B-$3.3B, below a $3.42B consensus. However, a light outlook was expected given the PC industry's recent woes. Demand is expected to pick up in 2H15 thanks to higher PC/console sales and continued enterprise/cloud strength.
- $706M was spent on buybacks in FQ3, helping EPS beat estimates in spite of a revenue miss. Also: Gross margin was 28.9%, +70 bps Q/Q and +40 bps Y/Y, and above guidance of 28.5%. While revenue fell 2% Y/Y, operating expenses rose 18% to $555M, thanks to both higher R&D and marketing/admin spend.
- Boosting margins: Shipments of enterprise drives (higher-margin) rose 18% to 9.1M thanks to a server upgrade cycle and Web/cloud demand. PC drive shipments fell 14% to 31.1M, with plunging desktop volumes offsetting slight notebook growth. Consumer drives -11% to 4.8M; branded drives -14% to 5.1M. Hard drive ASP rose $1 Q/Q and Y/Y to $62.
- Western Digital (NASDAQ:WDC) is following Seagate higher ahead of its April 28 FQ3 report. The gains come in in spite of a 1.5% drop for the Nasdaq. BofA's upgrades are looking good for now.
- Seagate's FQ3 results, PR, earnings slides (.pdf)
Mon, Apr. 6, 12:43 PM
- Following the 20%+ plunge seen in response to the company's Q1/2015 warning, SanDisk (NASDAQ:SNDK) is trading 40% below its replacement value (as measured in terms of fabs, royalty revenue, and cash), estimates Bernstein's Mark Newman. That, in turn, leads him to call the NAND flash giant a compelling buyout target.
- Newman adds there's "growing unrest" among SanDisk investors over its current valuation, and considers the company an "obvious" target for activists. His list of potential suitors includes NAND rivals Micron and SK Hynix, and hard drive giants Seagate and Western Digital.
- Of note: Antitrust regulators would closely vet a Micron or Hynix acquisition, given the potential pricing impact of further NAND consolidation. And Seagate recently formed a NAND alliance with Micron.
- Susquehanna also argues today SanDisk makes for a good buyout target, but focuses specifically on Western Digital (WDC +0.1%). The firm argues an acquisition of SanDisk by Western, which has already made a string of flash-related purchases (all enterprise-related) to protect its flank as SSDs continue encroaching on hard drives, would be accretive for Western in year 2 even at a 35% premium.
Thu, Mar. 12, 9:17 AM
- Intel (NASDAQ:INTC) now expects Q1 revenue of $12.5B-$13.1B, below prior guidance of $13.2B-$14.2B and a $13.7B consensus. Gross margin guidance remains at 60% (+/- 2%), with lower volumes offset by higher ASPs.
- "All other expectations" have been withdrawn - that presumably includes full-year guidance for mid-single digit revenue growth. Guidance will be updated during Intel's April 14 Q1 report.
- The chip giant blames the warning on "weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain." In particular, it thinks "lower than expected Windows XP* refresh in small and medium business and increasingly challenging macroeconomic and currency conditions, particularly in Europe," are taking a toll on sales. Server CPU division sales are "meeting expectations."
- Other PC-exposed names are following Intel lower: Microsoft (NASDAQ:MSFT) -2.4% premarket, AMD -2.8%, Nvidia (NASDAQ:NVDA) -2.5%, HP (NYSE:HPQ) -2.3%, Seagate (NASDAQ:STX) -2.5%, Western Digital (NASDAQ:WDC) -2.7%, Micron (NASDAQ:MU) -3.6%.
- Update (11:35AM ET): While Intel is still down over 4%, Micron and Seagate have turned positive, and HP is close to breakeven. Microsoft, Nvidia, and Western Digital have pared their losses, but remain lower.
Tue, Mar. 3, 12:39 PM
- BofA/Merrill's Wamsi Mohan has reinstated coverage on Seagate (STX -5.4%) with an Underperform rating and $50 target, and on Western Digital (WDC -3.3%) with a Neutral rating and $117 target.
- Mohan is worried Q1 and Q2 hard drive demand (i.e. TAM) is tracking below expectations. With regards to Seagate, he's also worried about its relatively high PC exposure (especially for business PCs), SSD cannibalization risk in both the client and (high-margin) performance hard drive segments, and potential conflicts with OEM customers from Seagate's systems business (stems from the Xyratex acquisition).
- Though worried about Western's exposure to the same TAM issues as Seagate, Mohan is relatively positive on the company due to its "solid" SSD position (partly the result of acquisitions) and strength in the growing high-capacity enterprise drive segment (boosted by demand from Internet giants).
- Top hard drive/SSD controller supplier Marvell (MRVL -2.1%) is following Seagate/Western lower, as is hard drive assembly supplier Hutchison (HTCH -1.7%). The Nasdaq is down 0.9%.
- Marvell's decline comes as the company reveals a Release 10 4G modem at the Mobile World Congress (competes with chips from Qualcomm, Intel, and others), as well as a partnership with Google to support the Web giant's Ara modular phone project.
- Earlier: Western Digital buys object storage software firm
Tue, Jan. 27, 8:14 PM
- Western Digital (NASDAQ:WDC) guided on its FQ2 CC for FQ3 revenue of $3.6B-$3.7B and EPS of $1.90-$2.00, mostly below a consensus of $3.73 and $1.99. With shares having already plunged over the last two days due to Seagate's outlook and Microsoft's numbers, investors are giving the hard drive giant a pass.
- FQ2 gross margin was 30.5%, up from 30.1% in FQ1 and the year-ago period, and above guidance for GM to be flat Q/Q. Western is also guiding for GM to be roughly flat Q/Q in FQ3.
- Notably, Western puts the total addressable market for hard drives in calendar Q4 at 140.8M units, less than the 144M-145M estimated by Seagate. That implies an FQ2 share of 43.4%, down from 44% in FQ1 and 44.4% a year ago. Average shipped drive capacity rose to 1.09TB from 1.00TB in FQ1 and 874GB a year ago. ASP was at $60.
- $309M was spent on buybacks, boosting EPS. R&D spend rose 2% to $426M, and SG&A spend 27% to $164M.
- FQ2 results, PR, prepared remarks, factsheet (.pdf)
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, 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)
WDC vs. ETF Alternatives
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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