Storage Companies Week In Review: SanDisk, Western Digital, Seagate In Focus

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SanDisk Corporation (NASDAQ:SNDK) made headlines last week as its stock plummeted by 18% on Thursday, March 26. SanDisk’s stock price fell on the back of revised revenue guidance for Q1’15. On the other hand, hard drive manufacturer Western Digital (NASDAQ:WDC) unveiled its 6 terabyte (TB) enterprise-grade HDD, marketed as the most power-efficient hard drive in the industry. This was a positive step towards delivering high-capacity enterprise hard drives to compete with Seagate’s (NASDAQ:STX) marketing campaign “20TB by 2020″ for laser-assisted hard drives for enterprise and data centers. During the week, Seagate’s management indicated that it could start selling hard drives in the now extinct 5.25” form-factor. The stocks of Western Digital and Seagate were down by about 6-7% in the last week, while SanDisk’s stock fell by almost 25%. Comparatively, the NASDAQ-100 and S&P-500 indices fell by about 2-3% in the same period. Here’s a quick roundup on the developments in the storage industry.

SanDisk Corporation

SanDisk announced that its Q1 revenues could be around $1.30 billion, lower than the previous guidance of about $1.40 billion. As a result, its revenues would be about 15% lower than the prior year quarter. [1] This is the second consecutive quarter when the company revised its expected revenues, the prior occasion being January this year. The company expects weakness in its SSD and embedded storage product sales to continue through the March quarter. Additionally, the company is facing certain product qualification delays and there are indications that it has lost one of its largest OEM customers, rumored to be Apple (NASDAQ:AAPL), which has switched to Samsung (PINK:SSNLF) for sourcing SSDs. [2] [3] The company has yet to announce its expected revenues for the full year and has postponed its analyst day presentation from May to a later unconfirmed date. (See: SanDisk Revises Revenue Guidance, Stock Drops 18%)

See our full analysis for SanDisk

Western Digital Corporation

Western Digital introduced the Re+ high-capacity enterprise grade hard disk drives (HDDs) earlier this month. The 3.5″ form factor 6 terabyte (TB) hard drives consume as little as 6 watts of power per drive, which is about 40% lower than its existing range of high-end enterprise hard drives. [4] The Re+ range of HDDs and the previously introduced Helium-filled drives could potentially boost unit shipments in the enterprise and cloud storage segment for Western Digital. Both these drives claim to reduce the total power consumed by data centers and large enterprises. With an extra emphasis on power consumption, Western Digital management expects the total cost of ownership of large-scale deployments to decrease by as much as a few “millions of dollars” annually. [5]

See our full analysis for Western Digital

Seagate Technology

Seagate is betting big on its laser-assisted hard disk drive or heat-assisted magnetic recording (HAMR) drives. These drives have a relatively higher (up to 5x) areal density of storage compared to traditional hard drives. Currently, the highest areal density offered by Seagate is 1TB per square inch, while HAMR drives can store up to 5TB/square inch. [6] In a more recent development, Seagate’s management hinted that there could be a comeback for the extinct 5.25″ form factor hard drives. [7] These hard drives were popular in the 90s, before the 3.5″ hard drives became standard. These could be especially useful for Seagate given that the company would require a larger platter size for 20TB hard drives. In the past, Seagate has also explored the option of shingled magnetic recording (SMR) drives to improve storage density within hard drives.

See Our Full Analysis For Seagate Technology

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Notes:
  1. SanDisk Provides Business Update, SanDisk Press Release, March 2015 []
  2. SanDisk cuts revenue outlook, Market Watch, March 2015 []
  3. Samsung seals big SSD chip deal with Apple, Korea Times, March 2015 []
  4. WD Re+ Data Specifications, Western Digital, March 2015 []
  5. Western Digital debuts ‘world’s most power-efficient’ high-capacity 3.5-inch HDD for datacenters, ZD Net, March 2015 []
  6. Seagate preps for 30TB laser-assisted hard drives, Computer Weekly, November 2014 []
  7. Seagate hints at return of extinct hard drive form factor, Tech Radar, March 2o15 []
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