SOURCE: The Bedford Report

The Bedford Report

June 01, 2011 08:16 ET

Efforts by Seagate and Western Digital to Remain Relevant Receive Scrutiny

The Bedford Report Provides Analyst Research on Seagate Technology & Western Digital

NEW YORK, NY--(Marketwire - Jun 1, 2011) - The hard-disk drive sector has shrunk in recent years as a demand slump has paved the way for industry consolidation. Earlier this year, Seagate Technology and Western Digital extended takeover bids involving two Asian computer hardware companies, which would further condense the industry. Those potential deals are now facing antitrust scrutiny from European Union regulators who are concerned the deals would reduce competition to a standstill. The Bedford Report examines the outlook for companies in the Data Storage Devices Industry and provides research reports on Seagate Technology PLC (NYSE: STX) and Western Digital Corporation (NYSE: WDC). Access to the full company reports can be found at:

The EU is examining Western Digital's $4.3B purchase of Hitachi's disk-drive unit and Seagate Technology's $1.4B purchase of a Samsung Electronic operation. Regulators argue the Seagate - Samsung deal would consolidate Seagate's position in the hard disk drive market, leaving only two rivals, while the Western Digital and Hitachi transaction would result in only one company competing in desktop hard disk drives and just two rivals in mobile hard disk drives. The Commission will decide by October 10 whether to clear or block the two deals.

"Hard drives are the backbone of the digital economy. The sector has already experienced significant consolidation, and the proposed acquisitions will further reduce competition," Competition Commissioner Joaquin Almunia said in a statement.

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Seagate's deal would give the company access to Samsung's NAND-type flash chips for its solid-state drive products. NAND flash chips are critical to portable electronics. Apple is particularly keen on NAND memory. Late in 2010 Apple unveiled its first complete product line of laptops relying entirely on flash chips for storing data.

Western Digital believes that its deal to purchase Hitachi will strengthen its position in the enterprise market. Analysts consider this a growth area as companies store more of their information in the data centres of the cloud.

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