:57AM -- Barron's (WDC) 12.62: Barron's Online article highlights hard disk drive company Western Digital and its recent runup in stock price. The co has been able to purge some of its debt, expand operating margins, and garner market share from competitors such as MXO. Despite business appearing to be stabilizing, a Fulcrum analyst interviewed in the article believes the disk drive market remains a "zero sum, loser's game". In addition, the analyst cites concerns over competition, potential price wars and end demand. Also, a Hoefer & Arnett analyst points to heavy insider selling given the stock's price runup as "somewhat of a concern". Given the co's execution in paying off its debt and balance sheet flush with $350 mln in cash, WDC is positioned to benefit from any recovery in PC demand. However, the onslaught of this recovery has yet to come to fruition with the article suggesting investors take a cue from co. execs and make "a graceful exit from these shares".
The last downgrade I remember was April 7 when JP Morgan downgraded WDC to neutral. The stock, which had briefly traded over $10 per share dropped from a closing price of $9.01 to a close of $8.52. From there it has marched to $12.62. This has included some recent amazing up days.
I am suprised anyone would call this a "zero sum loser's game", but I don't have access to the entire article. As a computer builder I know Western Digital is considered THE hard drive to put in a machine. Their serial ATA Raptor is cutting edge, and their older (we're of course talking months) 8 MB cache drives are the best. No intelligent computer person considers hard drives as commodities where brand name makes no difference. Their only real competition is MXO, IMHO, and they seem to be taking market share from MXO and everyone else.
Remember Hard drives are still a vital part of computers and now home entertainment centers.
My guess is this will create another buying opportunity (maybe a drop below 11), then WDC will continue to be at the forefront of the tech recovery.