All Star Analyst Mark Miller Interviews with the Wall Street Transcript: Storage Demand to Grow at 30% CAGR through 2015 Driving Selected Stock Valuations Higher

Wall Street Transcript

67 WALL STREET, New York - February 12, 2013 - The Wall Street Transcript has just published its Data Hosting Centers and Data Storage Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Data Hosting Centers - Flash Memory - Cloud Computing Secular Trends - Internet Infrastructure Build - Big Data, PCIe Storage, Cloud Computing and the Virtual Desktop - Data Center REITs - Colocation, Managed Hosting and Cloud Computing - Data Center Expansion -

Companies include: Seagate Technology (STX), Western Digital Corp. (WDC), Hutchinson Technology Inc. (HTCH), Intevac Inc. (IVAC), Imation Corp. (IMN), 3M Co. (MMM), Coherent Inc. (COHR), Newport Corp. (NEWP), Rofin-Sinar Technologies Inc. (RSTI), IPG Photonics Corporation (IPGP), Intel Corporation (INTC), STEC, Inc. (STEC), SYNNEX Corp. (SNX), Dell Inc. (DELL), Cymer Inc. (CYMI), SanDisk Corp. (SNDK)

In the following excerpt from the Data Hosting Centers and Data Storage Report, award winning "Best on the Street" analyst Mark Miller discusses the outlook for the sector for investors:

TWST: What is your current sentiment on the data storage hardware space and why?

Mr. Miller: At least in terms of the disk drive stocks, they've showed a surprising recent rally, especially considering that the TAM is going to be flat for this quarter and probably next, well below estimates at the beginning of last year. There are some interesting, almost paradoxical trends going on in the drive industry. Tablet computers are obviously impacting drive sales. That's part of the reason the drive TAM is down. It was 177 million units in the third quarter of 2011 - this is before the Thai floods. The industry has recovered from the floods, but demand this quarter is forecast to be flat at about 136 million drive units.

Early in 2012, the industry was projecting that the December-quarter TAM would be 185 million units, so a very substantial decline. The drive industry has been dealing with a weak macroeconomy, now believed showing signs of recovery. Several new products such as Windows 8 and ultrabooks are rolling out, which could have pushed out some demand last quarter. Finally, areal density growth is falling behind storage demand growth. Combined, these other factors could be supporting what now appears to be a stabilizing TAM, albeit at a low level, and possibly revive TAM growth later this year.

Seagate (STX) and Western Digital (WDC) are generating large cash flows, have very healthy earnings outlooks, and they are trading at modest p/e multiples. They've also been very proactive in redistributing their earnings back to the shareholders, either through dividends or through share buybacks. Dividend stocks have come back in fashion now with a lot of the Baby Boomers retiring and looking for income.

While everyone's concerned, rightfully so, about tablet computer erosion, the demand for storage is quite high. The demand for storage is forecast to be growing at 30% CAGR through 2015. So on one hand, you are seeing loss of some business to tablet computers, especially for laptops, and at the same time the demand for storage is growing, so it's kind of paradoxical.

What's eventually going to happen is that...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Rates

View Comments (0)