Sector Snap: Shares of data storage makers fall
Shares of data storage makers fall as analyst says demand trending toward low end of forecasts
Tuesday May 25, 2010, 2:34 pm EDT
finance.yahoo.com
PHILADELPHIA (AP) -- Shares of Western Digital Corp. and Seagate Technology fell Tuesday after an analyst said demand for their hard disk drives is trending around the low end of forecasts.
Barclays analyst Ben Reitzes also said channel checks indicate that pricing for the drives is lower than expected, putting a damper on expectations that the two companies will beat analysts' estimates in the quarter ending in June.
He cut his share price target on Western Digital to $44 from $50, and on Seagate to $26 from $30.
Reitzes noted that a slowdown in the notebook market is hindering the growth of both companies, but that prospects in the longer term would be brighter if their drives are used in computer tablets.
The analyst said that weakness in netbooks, due to the popularity of the iPad, restricts his growth outlook for the PC market this year.
But Seagate's margins should fare better than Western Digital's because of Seagate's dominant position in enterprise drives for business that ship with servers and storage arrays. The business market accounts for a quarter of Seagate's revenue compared with less than 5 percent for Western Digital.
Shares of Western Digital, based in Lake Forest, Calif., fell $1.49, or 4.2 percent, to $34.06 in afternoon trading. Seagate lost 88 cents, or 5.4 percent, to $15.26. |
