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Technology Stocks : Seagate Technology -- Ignore unavailable to you. Want to Upgrade?

To: Dwayne Hines who wrote (7732)	1/19/2011 3:34:27 PM
From: Sam	Read Replies (1) \| Respond to of 7841

WDC: Parsing Soggy Outlook For Disk Drives By Tiernan Ray blogs.barrons.com Shares of Western Digital (WDC) are weak today despite after-market gains yesterday following better-than-expected fiscal Q2 results. The stock is currently down $1.18, or 3.5%, at $32.77. The big downer, however, came in management’s prediction that Q1 disk drive unit shipments will total 155 million, down from 168 million last quarter, and below some analysts’ expectations. Western management said that demand might be as much as 160 million units, but that its forecast allowed for some flushing out of inventory of drives already in the channel. With Seagate (STX) earnings coming up this evening, parsing the meaning of the forecast is of special interest to the Street. Richard Kugele, Needham & Co.: Reiterates a Strong Buy rating, while raising his price target to $41 from $36. With Intel (INTC) forecasting a low-single-digit decline in PC volumes in the current quarter, WDC’s forecast seems “particularly conservative,” writes Kugele. He thinks it’s a head fake by Western to “lower the risk profile for the June quarter.” Kugele raised his revenue estimate for this year ever so slightly to $9.43 billion, and raised his year EPS estimate to $3.07 from $2.93. Katherine Huberty, Morgan Stanley: Reiterates an Equal Weight rating while maintaining a $35 price target. She’s taking it at face value that WDC is right and that there’s excess hard drive inventory out there. But with the company’s improvement in gross profit last quarter, and the promise of margins holding up, she raised her EPS estimate for this year $3.22 from a prior $2.52. The stock is worth 11 times forward earnings, she writes. Shebly Seyrafi, Capstone Investments: Reiterates a Hold rating, while raising his price target from $30 to $34. The conservative forecast for the quarter’s industry output may be “wishful thinking” in Seyrafi’s view, as Seagate is an aggressive competitor. Even if bulls argue Western is being conservative, he’s worried the company’s only choice is to lose share or to lower prices sharply. Seyrafi raised his EPS estimate this year to $3.30 from $2.56. Robert Cihra, Caris & Co.: Reiterates an Above Average rating and a $40 price target. He, too, thinks Western is trying to goad competitors into being rational: “WDC is taking a conservative stance and we believe SIGNALING to its competitors that one more qtr of under-shipping end PCs could be the smartest route to furthering the HDD market’s burgeoning recovery.” If true, that strategy could pay dividends when the second half of the year comes around, if PC builds increase after drive makers have been cutting back on production, giving the drive makers the upper hand. Cihra raised his 2011 EPS estimate to $3.14 from $2.73.

To: Dwayne Hines who wrote (7732)	1/22/2011 12:41:43 AM
From: Sam	Read Replies (1) \| Respond to of 7841

What's the matter with STX and WDC? Not to mention HTCH and IVAC, to name a couple of others. I knew something like this would happen, although I didn't think it would happen until late 2011, early 2012. Are disk drives beginning to spin down? There's a dark cloud over their heads By Chris Mellor • Get more from this author Posted in Storage, 21st January 2011 14:55 GMT theregister.co.uk Are flash and cloud storage starting to end the disk drive's spectacular run on the storage stage? Seagate has just announced its second quarter results for is fiscal 2011 year, with an abrupt drop in profits - $150m compared to $533m a year ago; and lower revenues too - $2.7bn compared to $3.03bn a year ago. Western Digital's quarterly results were better but it too is forecasting lower demand for disk drives. WD revenues in its fiscal second quarter, ending 31 December 2010, were $2.48bn ($2.6bn a year ago) - Wall Street had been expecting $2.35bn, with net income of $225m ($429m a year ago). It shipped 52.5m drives compared to 49.5 million a year ago. It is forecasting next quarter's revenues to be lower than Wall Street had been expecting; $2.2 - £2.5bn. Revenue and profits were down year-on-year although drive ship numbers were up. WD said the total addressable market (TAM) was 168 million in the latest quarter, but thinks it will only be 155 million in the next quarter, partly because there is unsold inventory in the channel; six to eight million units. Seagate is forecasting next quarter's TAM to be 155 million - 165 million units, higher than WD. Stifel Nicolaus analyst Aaron Rakers commented on the Seagate results, saying they were "indicative of shipment share losses in each market segment (of particular note, traditional enterprise-class drives" including desktop, mobile and enterprise. "Seagate noted that the industry does have some excess capacity at this time... Consumer demand for PCs continues to be muted, although Seagate is seeing a strengthening of commercial demand for PCs as well as in the enterprise market." One conclusion to be drawn from the two HDD suppliers' numbers is that demand is falling behind supply. Yet data growth is continuing its pell-mell sprint to the zettabyte level. What gives? Tablets and the cloud Tablets and the cloud spring to mind. PC ship estimates are down because tablet sales are sucking away demand from PCs used primarily for internet browsing and other content-consuming activities. We're heading towards a cross-over point where combined smartphone and tablet sales overtake PC sales. The cloud means consumers are using remote storage from service providers more and more, so that they need fewer gigabytes or terabytes of external storage. It's very, very early days and this is just a pair of quarterly results, but you can draw yourself a picture where flash-using tablets are cannibalising desktop and notebook sales, driving down demand for desktop and mobile drives. You can say laptops will use more flash, following the MacBook Air example, meaning more lost hard disk drive (HDD) sales, and go on to say that Mozy, Nirvanix, and other cloud service providers are cannibalising external HDD sales. HDD pessimists say things are only going to get worse. Flash is on a roll; Dell has just added Pliant Lightning Enterprise Flash Drive SSDs as an option for its PowerEdge server and PowerVault storage products, and EMC has said it has sold 10PB of flash storage products. Indeed, flash market watcher Zsolt Keres thinks that data centres will transition to 100 per cent solid state storage in the 2015 to 2019 period. HDD manufacturers have no truck with that view. Back on the tablet front, Seagate is pushing the message that flash-using content creation (smartphones, digital cameras and video camcorders) and consuming devices will fuel demand for external HDD storage. In that case the external HDD TAM should increase. We don't know if that's the case but it is going to become a vital number to watch. If it increases then tablets and the cloud will probably not cause great swathes of the HDD business to be lost. If it turns down though, and so does the overall HDD TAM, then the HDD's starring role on the storage stage could be coming to an end. It will take years to decline because flash fab capacity has got to increase enormously but it will happen; the spinning is going to stop. ®