davcnslt

Western Digital: Time to Sell?

Hi mark,
many thanks for your notes on WDC. First I wanted to correct a misuse of terms:
"solid state drives would be a thing of the past as flash drives would overtake the market"
Actually solid state drives and NAND flash drives are similarly used. An exception is that the term "solid state drives" would also refer to "drives" that consist of RAM memory as well. In addition, with regard to your thesis, today there is little sign of WD growing inventory, nor is there any reason to believe that inventories would grow in the prime buying time normally associated with the back half of the year. In fact, since mid year last year the HDD industry has been markedly restrained in terms of controlling inventories and prices. During the stronger buying season of the back half, we could expect pricing to remain solid. For my money it is too soon to sell WDC. The stock still sells at attractive multiples, guidance is solid, and WD has been banging on all cylinders. With recent updated forecasts from both Gartner and IDC reflecting PC growth of 10% with the more brisk buying still to come, I believe shareholders are better served holding or even chasing a little. WD's execution in the fastest growing segment of the HDD business, the 2.5 inch mobile sector is really quite phenomenal.