Apparently the latest news from Toshiba, going to a Japanese court against WDC, has contributed to weakness in WDC. I agree with your view that the whole semiconductor sector is weak today. The reasons for that weakness as well as the particulars for WDC suggest that too many traders or short term investors are not considering the big picture.
As far as WDC goes, the earlier arbitration filing in the U.S. is not trumped by the more recent Japanese court filing. The contractual rights of WDC are pretty clear, even admitted to my some who now view the stock as a sale. The prospects, in terms of increased revenues and profits from NAND flash memory, remain strong for the entire sector. I'm confounded, like many others, by the surge in demand for flash memory and solid state memory devices in general. The need for more storage, particularly for cloud and enterprise servers, is remarkable, and likely to persist for at least another two or three years. Thus, the market fundamentals for the entire sector remain intact.
Would I want to buy more WDC at current prices near $81? Being an investor primarily interested in long term gains (at least one year, but probably more), I would evaluate WDC not only within its tech sector but also in comparison to other growth sectors, such as biotechnology. In this broader perspective, WDC seems to me to be one of several buy candidates at its present price, but there are other stocks that appeal to me more than WDC, based not only on product growth demand but on other fundamentals such as debt to equity ratio and management quality.
Art |
