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Strategies & Market Trends : Value Investing

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To: IndependentValue who wrote (51975)	8/1/2013 2:48:36 PM
From: Jurgis Bekepuris	Read Replies (1) of 78658

Hi, I pretty much agree with you. I have somewhat large position in WDC/STX. I probably won't add here, but they still look somewhat cheap if you don't think that disk demand will continue to drop. Risks: - SSD conversion on client machines - mostly still not there. Last time I looked the prices were still about 10x vs HDD. Still it's a risk if the prices drop to 5x or below. To be watched. - Tablets/phones/ultrabooks displacing laptops/desktops. Somewhat real risk although perhaps overstated. Can kill 5-10% of sales in a year... not sure how much longer term. - Diworsefication: if WDC/STX try to burn cash to get into SSD space, they might throw good money into the fire. SSD market will be supercompetitive for next 5-10 years like HDD was in 90's-2Ks. WDC/STX have oligopoly in HDDs, they should not waste that advantage. Note that "enterprise/cloud will carry WDC/STX" argument is somewhat hollow. Look at percentage of their sales to enterprise. If clients stop buying HDDs, these co's will lose over 50% sales. Personally, I just bought a NAS with WDC Red 3Tb drive for photos/movies/etc. But anecdotes don't carry companies either. :) Good luck

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