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Seagate Technology Public Limited Company Message Board

  • ww4231 ww4231 May 10, 2012 12:22 PM Flag

    WDC vs STX management


    one contrast in WDC/STX managment is evidenced by a recent occurence.
    We remember the recent conference call and what many here felt was a poor job by the WDC CEO.
    But we see that in the weakness that followed, WDC "quietly" made large share repurchases at low prices. (this from recent SEC filing).
    This is combined with ZERO insider sales during the period. This is combined with clearly a better balance sheet.
    Contrast to STX's managment, giving a rosier outlook , also an agressive share buyback , and with large insider sales.
    I am still very much of the opinion that STX would do better to buy back more of the debt than they are doing, to allocate just a bit more of the money being used for the buyback to debt reduction, particularly the 10percent bond.
    Additionally, Perhaps if they followed the example of WDC managment just a wee bit more, STX's valuation would improve on the markets.
    I have no position in WDC currently.

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    • It is not always as cut and dried as people try to make it.

    • I didn't say it was not a fair comment. There are situations, even in my example of paying off a low interest mortgage with funds earning more, where it could be the best thing to do. One example that comes to mind would be the relative tax effect on the interest earned versus the deduction that one would have on the mortgage. If a person does better taking the minimum standard deduction, then it would be worth looking at the trade off. There also could be a cash flow benefit, especially for the elderly.

    • quickdraw,

      That is the same point I was trying to make earlier. I admit that there is no assurance that the higher eps and, perhaps ultimately, higher dividends per share that will result from a reduction of the outstanding share count resulting from repurchases does not guarantee a higher share price, particularly given the crazy low valuation given the Company today in the marketplace.

      On the other hand, I think you can pretty much guarantee that there will be no meaningful impact to the stock price resulting from a partial retirement of the debt.

      Personally I would stick with door #1 but I wouldn't say that bhayes is making a crazy point; it's a fair comment.

    • Who is this COMPANY you are referring to?

    • No, you need to understand that share buyback and the resulting appreciation, etc. can be a better return than the savings of paying off debt with the associated redemption premium.

      Here I've got to trust that the company knows more about the trade offs than we do since they have access to all the books and information.

    • You need better ears.

    • bhayes, your argument sounds the same as when a person pays off his 5% mortgage with money that has been earning him 10%.

    • "For once you and I may actually agree."

      Who the heck are you?? Out of the closet today!

      " less about product line and technology acquisition and more just about getting rid of competitors"

      Maxtor was on their way out all by themselves. Maxtor was junk which is exactly why STX wrote $6 per share off of Maxtor acquired junk.

      Have you ever heard of antitrust??? Getting rid of competition ONLY works when you are able to violate the LAWS governing antitrust.

      The $6 in my pocket benefits me more than STX writing off $6 of my ownership interest.

    • For once you and I may actually agree. STX management demonstrated that they couldn't effectively manage an acquisition that actually required some post acquisition thought and care in the case of Maxtor.

      Hopefully the Samsung transaction and the companion WD/HGST deal will continue to prove different as less about product line and technology acquisition and more just about getting rid of competitors, but I certainly don't want this team to lay another $1 billion or more on some corporate misadventure.

      Buying stock back and paying dividends has much more certain benefits.

    • Lol,

      More like increasing from 1 to 2 would be like going from 1.25 to 2.50 with today's share count.

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