Western Digital Soars on Speculation of IBM Purchase
Irvine, California, Aug. 19 (Bloomberg) -- Western Digital Corp. shares have soared 47 percent in the past two days on speculation that the No. 3 computer disk-drive maker could be an acquisition target of International Business Machines Corp. or other rivals, analysts said.
Western rose 1 3/16 to 6 7/8 today in trading of 13.8 million shares, making it the sixth-most active U.S. stock. The stock touched 3 1/2 on Aug. 12, its lowest level since 1993.
Disk-drive makers, whose devices store information and computer programs, are in a price war to keep or gain market share as prices on personal computers fall. With profit margins under pressure, shares of disk-drive makers have plunged, making some of them attractive acquisition targets, analysts said. ''Buying Western Digital would help IBM participate in the desktop market,'' said Jean Orr, a Nutmeg Securities analyst. ''But I don't think it is likely that IBM is trying to acquire WD.''
IBM, the world's largest computer maker, and Western Digital both declined to comment. ''We've heard the rumors about Western Digital,'' said Charles Payne, head analyst at Wall Street Strategies Inc., a research firm that follows mergers and acquisitions and rates their probability for investors. ''When you get such a large increase in trading, you have to think something is brewing.''
Payne said that with the low price of Irvine, California- based Western Digital shares, the ''risk/reward'' factor is favorable.
Seagate
The speculation also includes Seagate Technology Inc., the No. 1 disk-drive maker, as a possible buyer for Western or for drive maker Maxtor Corp.
Phil Montero, Seagate manager of corporate communications, said that the company ''is always actively looking for partnerships and acquisitions,'' but has nothing to report regarding the speculation.
Maxtor's senior director of investor relations, Catherine Hartsog, said the company doesn't comment on speculation. ''When you get this kind of situation, that creates an environment where lots of rumors are spawned,'' she said.
Maxtor shares rose 9/32 to 6 11/16. Seagate shares rose 11/16 to 32 1/2, while IBM fell 15/16 to 122 15/16.
|
