Seagate Technology Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Seagate Technology

STX 278.47

+1.0%

Nov 6 4:00 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: duedilly	10/3/2006 9:50:39 AM
	of 7841

DB on WDC - Marvell Pre-A's Sept Q results citing weak HDD business The company cited weak HDD sales and excess inventory at HDD customers. While we expect the Street to read the miss as a negative for WDC, we believe Marvell's miss was likely the result of (1) an inventory build in C2Q at the HDD OEMs (WDC inv up 15% Q/Q, STX up 16%), (2) the disappearance of the Maxtor business, (3) a competitive environment in notebook (Fujitsu and Toshiba), and (4) slower enterprise sales at Seagate. We continue to believe WDC will have solid results this quarter and we expect the stock to rally into year-end on better pricing and better-than-expected results. Desktop pricing is more stable than the June quarter Pricing is key in the HDD business and our checks on pricing have not changed. Pricing is better this quarter than it was last quarter and our checks last Friday bore this out. Desktop pricing was relatively stable in September, after seeing declines in July and August. If HDD end demand was as bad as Marvell suggests, pricing would not have been stable. Expectations are low and in-line results are very achievable Expectations were already low for WDC and are now lower. We believe even in line results could cause the shares to rally. At ASP declines of 3%, our model suggests WDC's units would have to be up only 6% for the company to make the low end of guidance. Over the past 5 years, the lowest Q/Q unit increase in September has been 7% (range 7-22%). Coming off of a very weak June Q, we believe historically low sequential unit growth is very unlikely.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next