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Western Digital Corporation (WDC)
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If the news gets any more bullish, the stock may go to zero ...
Crypto Mining Could Give Huge Boost to Seagate and Western Digital Stock
Disk-drive demand continues to be warped by the rapid adoption of Chia, a cryptocurrency that relies on large capacity drives to "farm" new coins.
Chia's approach, by contrast, is tied to storage capacity committed to being used on the blockchain, rather than computational might. And that is warping demand for high-capacity drives.
In a research note on Thursday, Loop Capital analyst Ananda Baruah asserts that both Seagate Technology Holdings (ticker: STX) and Western Digital (WDC) -- which together control most of the world's disk-drive production -- could see a sustained boost to both pricing and profits from the Chia-driven acceleration in demand for high-capacity drives.
If that demand is sustained, he asserts, Seagate's annualized earnings could reach $12 a share, well above the Street's consensus forecasts of profits of $5.52 a share for the June 2021 fiscal year, $7.48 for FY 2022, and $7.71 for FY 2023. For Western Digital, he writes, profits could reach the $10-$12-per-share range, which compares to Street estimates of $3.83 for the June 2021 fiscal year, $8.87 for FY 2022, and $10.54 for FY 2023.
Any news to explain the huge drop in storage would be appreciated.
Janet and Nick
Susquehanna Raises WDC target to $155 from $125 on improving HDD shipments.
Just came out 10 minutes ago.
ORCL increasing cloud Capex spending to 4 billion dollar. This should bode well for WDC.
Wamsi Mohan from Today's Bank of America Merrill Lynch 2021 Global Technology Conference
Awesome. All right, great. Well, Bob, let's start with an overview of the demand environment. Can you just briefly talk about what you're seeing from a demand perspective?
Yes. I mean, we had expected 2021 to be a really good year for us, and that's the way it started out. I'm really pleased with how it's progressing. If you think about the markets from a content solution standpoint, which is really our consumer business, it's progressing very nicely, probably a little bit ahead of seasonal norms, and we're really excited about how things are going there. We've got over 350,000 outlets around the world, most countries we participate in we're in the number one market share position, and it continues to be a real strength of our company. If you think about the client devices business, again, it's going very well, strong PC demand, and that demand on the mobile phone side is really helping drive a lot of volume in that market, and it's across our -- both our flash and our hard drive areas; so that continues to be really good this year.
And then lastly, if you think about our data center business, we went through in digestion cycle at the end of last year, but we expected this year to come back strong, particularly with the cloud, and that's what we're seeing. Things are relatively stable on the enterprise side, we're hopeful that they'll begin to pick up towards the end of the year as we start to see more and more companies bring employees back into the office. So, I'd say, fundamentally, business is really strong across the board.
An long investment analysis (we’ll see if it posts)
Years ago, if I knew where a company’s earning prospects were heading, I could profit from all the ST fluctuations – and there were plenty, which meant plenty of profit to be made MT/LT (cf: STX’s refused buy-out, or the Thailand floods knocking out some HDD supply).
Then – 2019, I keep thinking – the rules changed. Micron (with WDC reflecting the trends) sailed through more than half a year of forward PE’s at 6 and trailing PE’s dropping to 3. That was an expensive lesson for me. I still wonder – and have posted the question – did the “market” know the hard times were closer than expected, or did it – our Imponderables – wager the game to the downside, and were rewarded when storage prices turned down sooner than expected. In any event, share prices did not follow that “accumulate on expectatations 6 months out” strategy.
Right now WDC – and Micron – are far above those super-low PEs. My own take: memory storage stocks are gradually gaining market recognition, but only over a matter of years, and don’t expect processor stock PEs anywhere in the foreseeable future. Then again, never say never.
Meanwhile, since MU beat earning estimates 3 months ago with raised guidance, it’s down something like 20%. WDC kept rising, but now it too is falling.
The real question in my mind is: what base PE level are we playing around? Despite all the silliness – “memory stocks are down because prices aren’t expected to rise as fast” – the fact that ER numbers are busting out to the upside seems – seems – to suggest that we are indeed in an investor shakeout mode. Check the multi-year SP cart; I’m sure that all those sharp dings along the trajectory engendered similar consternation. Long-term is good term…that’s the best approach I have.
Final note: Just a couple years ago, the earnings analyses revolved around 3 points: how many more bits are going to be sold this year (always up, NAND supply CAGR still pushes me where to invest), drop in cost of bit production (as shrunken nanometer numbers produce cheaper product), and the ongoing drop in price per bit; the expectation was that the first two would total up greater than the last, and corporate income would advance accordingly. Until - demand unexpectedly fell (and WDC seemed to have a few of its own problems, which didn’t help).
Now supply is up – and trying to catch up to demand - the nanometers keep shrinking, but the price keeps… rising! All three point in the same earnings direction. But our PEs are certainly higher than the last price cycle’s bottom numbers, when the general perception was that the share price was only starting to expand.
So what base PE are our “markets” now aiming at, and how long before the share price starts erratically jumping around that number? That seems to me the $64 question.
Stifel increases PT to $110 from $98, maintains Buy recommendation
HDD is the foundation of cloud. WDC is a key part for all cloud company. WDC will go to 110-140 soon
Can anyone spare a 20TB HDD to help a farmer?? How about 2 10TBs?? 8TB? (I can't seem find any at the farmer's market.... or any market).
Well, STX dropped the 1st shoe. Demand is blowing the doors off. I don't expect WDC to issue any update (doesn't seem to be the Goeckeler's MO), but it would be nice if they did. WDC has the same HDD increase working that STX has, but WDC has the SSD/Flash kicker. With NAND prices up more than forecast for the June qtr.
Who needs a BU now? With all this ransomware floating around, I suspect, for no good reason, that some of the new found demand for HDDs (the drive that refuses to die - hard to kill - except in a crash) is likely being driven by non-cloudy types checking if the their digital data still exists at least 3 different locations and thus might be a 'real' NFT. I'm waiting to hear future horror stories of "BU's Gone Wrong!" and it's even sexier sequel 'BU's Gone Bad!"
This could be real problem for Chia farms. Of course, Tosh-HDD may benefit from all this new HDD demand. They did keep up in the cloud space.
At least things have settled down at Toshiba, so that's one less thing WD has to be concerned about.
When is that STX Mach-2 going to 'Dominate the Market' with its wealth of IO's? Well, lets just say, recover the R&D expenses for a PR stunt.
Thought these wdc dudes got uprades in the 80s to the 100s thing is down 10% in two weeks.
CJ Muse at the investor conference today asked Goeckler why the stock is about 80% undervalued based on STX and Kioxia rumored IPO valuation. So I guess we aren't the only ones noticing this valuation discrepancy but still not making a difference........yet.
Hosseini also reiterated a Positive rating on Western Digital shares, lifting his target for the price to $155, the highest on Wall Street, from $125. He increased his forecast for profits for the June 2021 fiscal year to $3.93 from $3.81 and said he now sees fiscal 2022 profits soaring to $14.59 a share from a previous estimate of $14.16. His early reading on the outlook for fiscal 2023 calls for a further increase to $16.42 a share.
He said the company is seeing better-than-expected growth for 18 terabyte drives, and that like Seagate, it could get a sustained boost from Chia miners if the currency has sticking power.
General Question: what does the potential congressional funding for semiconductor manufacturing mean for WDC (and others) – I’ve googled around for details on who might get how much for doing what, but I’ve found only generalized funding ideas.
If the gov’t hands over a lot of cheap money, they are going to want something in return; plenty of domestic product for sure…but lower prices too? The two are understood to go inextricably hand in hand.
My own (currently optimistic) feeling is that the memory chip/device producers are already in the process of getting their supply/pricing act together, much as the hard drive business did when the number of competitors was narrowing down to a few. Of course, the next cyclic bottom might disprove that optimism.
So I’d be happy to hear any thoughts on how federal funding might affect the funding recipients in years to come. It’s generally agreed that WDC is currently in a particularly sweet spot, but arguably Western might be able to maintain that position for the foreseeable future, maybe even tighten up the consequences of future target misses (to the mutual advantage of competitors) if everybody gets their demand predictions and capex close enough to the right numbers. But I don’t expect the government to like that idea.
Does anyone know whether the funding discussion is about cheap loans or outright grants? Obviously grants would be expected to specifically entail a lot more supply expectations.
And maybe this semiconductor funding never passes…but maybe it does. All thoughts are welcome
This stock is now back below January 2020 levels in the midst of the rest of the tech sector having the most epic run in its history. Unbelievable
As the Disk Spins: When will the 9-disk barrier be broken (again)?? Apparently, the path forward lays in getting small, as Steve Martin said. Time to dump the COC (diamond like though it may be) and move to the those monolayers. That next monolayer will be so sweeet!
Another please finance me, plea from academia? Though that GMR stuff worked out OK. PMR not so much. And then there is/was HAMR. Even the microwave's failed the consumer.
Ten disks would actually make the STX drive production economics' possibly feasible, for SOME customers.
How high will they get?
Graphene protective coating could signal 'ultra-high storage density' media
Graphene protective coating could signal 'ultra-high storage density' media
Going out on an early limb even with a whole month left in the qtr .... but WDC is going to smash the upper end of their guidance at $1.60. They have probably sold everything they can make at prices and GMs higher than expected.
David Goeckeler: Demand in the channel continues to be very strong. I mean there's unmatched demand in the channel. We've had that for a couple of months now. And so we're working very hard to fill that every way we can. And we're adjusting pricing appropriately for that. So -- I mean, the team is on top of this. My leader that runs the channel business has been in this business for 33 years, and he told me like I've never seen anything like this. So it was really, really, really strong demand almost immediately.
Bob Eulau: So we've got our factories operating at 100%, we're working to try to get our inventory levels back up. But yes, it's a pleasant problem…
Comments in code for From BEARns on STX; If it good for STX it is good for WDC!!
Seagate Lifts June Guidance on Surging Drive Demand. A New Cryptocurrency Helped.
Once highly reliant on the personal computer market, Seagate’s focus has shifted to high-capacity drives used in data centers and the public cloud. Moseley’s reference to strength in demand from the “distribution channel” likely reflects the surge in demand for drives used to “farm” a new cryptocurrency called Chia.
Hold on for the good news that will also follow WDC !!! Yep down on the "Farm" making Hay and Milking Cows!!
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