SOURCE: The Bedford Report

The Bedford Report

April 07, 2011 08:16 ET

Seagate and Western Digital Poised for Larger Profits as HDD Competition Shrinks

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

NEW YORK, NY--(Marketwire - April 7, 2011) - Over the past year the Data Storage Devices Industry has become a hotbed of Merger and Acquisition activity. As companies get larger and experience diminishing returns in their core business, they are showing their willingness to utilize their large resource pools to acquire smaller companies in a race to diversify themselves. Given the limited opportunities for meaningful acquisitions, the companies in stronger financial positions, and the willingness to act, stand to gain the most from such activities. 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:

Recently Western Digital announced that it is going to pay $3.5 billion in cash for Hitachi Global Storage Technologies plus 25 million of its shares valued at around $750 million. The acquisition is expected to strengthen Western Digital's 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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When combined with Hitachi's 18% market share by units shipped in Q4 2010, Western Digital will vault to a 49% hard disk manufacturing market share, according to Western Digital. It says No. 2 Seagate has a 29% share.

Western Digital and Seagate have been struggling to adapt to a future where fewer consumers are purchasing laptops. Flash drives, or solid-state drives, consume less power and are faster and are viewed by many as the future of the disk drive industry. Seagate's CEO Steve Luczo believes that the hard disk drive (HDD) market has marginal excess capacity and faces "muted consumer demand" for PCs but strengthening demand for PCs from companies.

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