OT Questions from a naive new WDC shareholder:
In its last q of operation readrite was selling head assemblies to wdc for $6/each. But it cost them $9/each to produce.
When was that?
How dependent was WDC on RDRT for heads?
How has WDC made up for the lost supply of head assemblies since RDRT failed?
The question now is why did wdc buy that operation, and how do they fix that problem?
Could they have bought them to prevent someone else from acquiring them?
Is this type of vertical integration unusual or undesirable in the HDD industry? If so, why?
Does WDC have valid competitive reasons for failing to disclose the answer to your question at this time?
Has WDC had to act in such a precipitous manner to acquire the assets that it may not have had the time to do a thorough analysis?
Is there reasonable concern to think that the acquisition was motivated by the wrong reasons, i.e., meglamania, growth w/o profitability, or that it will be unusually difficult to assimilate?
I didn't hear the entire cc, but there were many questions about the acquisition. Your question is fundamental and goes to the very rationale behind the acquisition. I recall at one point in the cc, WDC saying in general terms, "There are two reasons behind an acquisition like this: capacity and technology." But this does not exactly answer your question. Regardless of whether or not the question was actually posed, I am surprised that it was not anticipated and answered in a satisfactory manner, unless there was simply not enough time to prepare, in light of the short amount of time between the announcement of the acquisition and the quarterly cc. If that is the case, would it be safe to assume there will be a seperate cc announced to discuss such issues? I am worried that management may have tried, but failed, to address the concerns about the acquisition from the investment community, for that has other implications. If it's simply the issue of management silence for competitive reasons and to allow themselves maximum leeway in decision-making as to how the assets are going to be deployed, then I can understand that and recognize investors' rights to answers need to be balanced against such legitimate interests. It all really comes down to whether WDC management is deemed to be trustworthy and competent to make such decisions in the best interests of shareholders.
Until that is answered, wdc's shares will be very volatile.
And therein lies the opportunity for the speculator. You have been buying and selling (though mostly buying) WDC for quite a while. You must know that markets hate uncertainty and that management has a substantial amount of freedom (within certain constraints) to orchestrate the flow of material information to the market to serve the company's interests. If you are bullish, you presumably have a belief in the quality of management. So what are you waiting for? The company has shed 25% of its market value in the last 24 hours. Your profile lists a number of other "favorite stocks" you could sell to buy at these bargain prices. Are you willing to make the commitment in the face of this uncertainty, or does it appear to you that management may have blundered?
Sam |
