| | | The scenario I outlined in earlier comments may have actually come to fruition.
During the period that Chinese regulators hemmed and hawed and allowed the antitrust approval process to go on longer than necessary (it was obvious there were no antitrust issues, based on Chinese or any other laws), WDC shares began to decline. After the latest WDC financial report, they declined further and hit a new recent low. If Chinese interests now begin buying WDC shares, they'll be paying less than they would have paid by supplying $4 billion cash to WDC under the earlier purchase alternative.
I now believe WDC shares, near $37, are more reasonably priced for any investors. Though there's a lot of debt service in front of stock dividends, I'm fairly confident the excellent future prospects from SanDisk's rapidly growing enterprise server business will carry them through the current period of slack demand for hard drives, PCs, and in general, smaller devices using hard drives. In my own case, I think I would want to own a mix of WDC shares and secured bonds, but only if the secured bonds can be bought below face value. I definitely did not think WDC shares were worth purchasing when they were trading in the $40s.
In order to manage my own SNDK investments, I transferred some of my shares, purchased at less than 20% of their selling price, to a charitable trust, when the shares were selling above $76.60. At the same time, I sold a substantial portion of my shares, purchased at prices averaging about $40 in order to minimize the tax on the capital gain. The remaining unsold shares will convert to cash plus low priced WDC shares, and I may use some of that cash to increase my WDC holdings at current prices. There will still be taxes to pay on the shares that transfer this week or next, but they are offset for the most part by the charitable donations.
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