WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 171.17

-1.7%

9:31 AM EST

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To: Bruno Cipolla who wrote (59876)	2/12/2016 2:02:27 PM
From: Art Bechhoefer	Read Replies (2) of 60323

"Am I missing anything?" Maybe. WDC is taking on substantial debt in order to buy SNDK. Without really strong gains in sales, I doubt WDC can maintain its current dividend. On the other hand, it's also true that with interest rates at historic lows, WDC can borrow at relatively low cost, allowing it to cover debt service costs easier than would be the case if interest rates were in a more normal range. Many years ago, WDC issued convertible bonds to finance growth. It's possible they could do the same now, at very low cost. But the bond payments would be ahead of any stock dividends, making the stock less desirable. If WDC decides once again to do convertible bond financing, I think I would be a buyer of those bonds (as long as the conversion feature were reasonably good). Meanwhile, the prospects for the takeover at a price of $86.50 for SNDK shareholders look better than ever. Art

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