Let’s dig into the cause of Marvell’s accounting issues, see how one thing led to another, and look at how its new management plans to untangle the chaos.
Applied Materials expects memory spending to remain flat on a YoY basis. But it expects spending to shift from DRAM to the nonvolatile flash memory NAND.
Revenues and operating expenses In fiscal 4Q16, Western Digital (WDC) expects revenues in the range of $2.6 billion–$2.7 billion. The firm expects its gross margin percentage to improve compared to fiscal 3Q16. It also expects operating expenses of $475 million in 4Q16. Excluding the impact due to the interest expense from debt financing related to […]
On April 29, 2016, Western Digital (WDC) announced its fiscal 3Q16 results. It reported revenues of $2.8 billion and net income of $74 million, with earnings per share of $0.32.
After the announcement of its fiscal 1Q16 earnings, SanDisk stock rose by 0.8% to $76.50 on April 28, 2016. However, the very next day, the stock fell.
SanDisk’s product mix consists of five segments: removable, embedded, enterprise, client SSD (solid state drive), and other. The company earns most of its revenue from removable.
In fiscal 1Q16, SanDisk’s (SNDK) revenue rose 3% YoY, topping analysts’ estimate and its own guidance. This was the first growth after four consecutive quarters of decline.
This earnings season is full of surprises for the semiconductor industry. SanDisk (SNDK) has now posted surprising results for fiscal 1Q16, which ended April 3, 2016.
Dell is planning to sell ~$9 billion of unsecured junk bonds backing the EMC Corp. (EMC) acquisition. Dell is largely expected to pay an interest rate of ~10% unless there is a major improvement in the bond market.
SHRAX’s assets were invested across 76 holdings as of March 2016, one less than a quarter ago. It was managing assets worth $12.6 billion as of March’s end.
Western Digital and Seagate account for 80% of the global HDD market. In the last few years, the HDD market has shrunk, while the SSD market has expanded.
Micron Technology’s fiscal 2Q16 revenue and fiscal 3Q16 guidance fell short of analysts’ estimates. The company expects growth to pick up in fiscal 2H16.
Micron is differentiating its 3D NAND flash technology from that of peers. But the ScanDisk-Toshiba joint venture says its 3D NAND offers more capacity.
For 2016, Micron has set aside ~$5 billion in capital expenditure, of which ~$800 million is to be spent on one facility in Singapore and one in Idaho.
Micron expects DRAM supply to grow in the range of 20%–25% in 2016 and then to slow to less than 20% in 2017 because technology is reaching scaling limits.
From a purely NAV (net asset value) return standpoint, the Vanguard Capital Opportunity Fund has had a forgettable one-year period until March 18, 2016, as it stood tenth among its peer group.
While Micron Technology (MU) expects growth in memory content could drive future growth despite the slowdown in the consumer market, it continues to invest in breakthrough innovation.
Micron is aggressively expanding its 3D NAND capacity. It aims to spend up to $2.5 billion of capital on ramping up production of 3D NAND Gen 1 and starting manufacturing of the Gen 2 chip.
The overlap of products and customers between SanDisk and Western Digital would help reduce $180 million in operating expenses over the next 18 months.
The merger will create a company with nearly $20 billion in combined revenue. It would be able to capitalize on the enterprise storage products market.
The merger was as a breather for SanDisk shareholders. They have been facing lower share prices after the price fell by 24% between March 20 and March 26, 2015.
Unisplendour backed out of the deal to acquire a 15% stake in Western Digital for ~$3.8 billion. Investors wondered if the merger deal would come through.
Weaker shipments of smartphones, tablets, and notebooks also resulted in a 10%–11% drop in prices of eMMC and SSD (solid state drive) products in 4Q15. Revenues of the global NAND flash industry fell 2.3% quarter-over-quarter in 4Q15.
Last week, Tsinghua Unigroup’s subsidiary Unisplendour announced that its board of directors decided to terminate its investment plan in leading data storage company Western Digital (WDC).
Alken stated that in light of changing market dynamics and the capital market scenario, the $19 billion price for SanDisk, which has been posting declining earnings in fiscal 2015, is too high.
SanDisk and Texas Instruments joined the fray and reported their fiscal 4Q15 earnings on January 27. Explore this series for performance and growth prospects.
ClearBridge Aggressive Growth Fund’s top ten equity holdings in December included UnitedHealth Group (UNH), Comcast (CMCSA), SanDisk (SNDK), Broadcom (BRCM), and Anadarko (APC).
Though it failed to report revenue growth, IBM’s revenue and EPS of $22.1 billion and $4.84 beat analysts’ expectations by $20 million and $0.03 per share.
On January 19, 2016, IBM will release its fiscal 4Q15 results. In the last 14 consecutive quarters, IBM has not reported any revenue growth. IBM beat Thomson Reuters’s consensus EPS estimate of $3.30 in fiscal 3Q15.
Although Apple (AAPL) has continued to post record-breaking earnings in 2015, it still fell 3.8% for the year. The negative calendar year returns were the first since 2008.
Toshiba is looking to start an evaluation system for the CEO and president of the company, in which 120 senior managers will hold a vote of confidence in January 2016.
Micron’s technology transition will slow down the output and revenue in the short term. The company will be able to meet advanced memory products’ needs.
The ClearBridge Aggressive Growth Fund’s assets were invested in 78 holdings in stocks, bonds, and cash as of November 2015. The fund managed $14.04 billion in assets as of the end of November.
As of November 20, 2015, SanDisk (SNDK) generated investor returns of -25.69% in the trailing 12-month period and -4.39% in the trailing one-month period.
Western Digital has a current ratio of 2.68x, higher than the industry median of 1.93x. Its quick ratio is 2.29x, higher than the industry median of 1.45x.
The third-largest flash memory manufacturer in the world, SanDisk has a market cap of $15.04 billion. Western Digital follows with a market cap of $14.3 billion.
Growth in the NAND industry has slowed from more than 100% during 2005–2010 to ~50% during 2010–2015. Micron is responding to this trend by ramping up production of 3D NAND at its Singapore fabrication plant.
Micron is responding to the changing memory market by increasing investment in production technology. It will ramp up its DRAM capacity on 20nm technology and its 3D NAND capacity in collaboration with Intel.
Viacom’s investment in original programming Viacom (VIAB) reported its fiscal 4Q15 and fiscal 2015 earnings on November 12, 2015. The company is increasing its focus on original programming. An example of this is Viacom’s Nickelodeon network. During fiscal 4Q15, Nickelodeon had a large number of new TV shows with content for kids that had high […]
In the SanDisk–Western Digital merger agreement, the MAE clause lays out the circumstances under which Western Digital (WDC) can back out of its merger with SanDisk (SNDK).
Diversifying revenue streams and achieving scale is a big driver of the SanDisk–Western Digital merger. They offers similar products, and the combination will help them negotiate better with customers.
If you set up the spread with the SanDisk-Western Digital merger assuming you are getting $85.10 plus 0.0176 shares of WDC, you are expecting a $9 spread.
While the Western Digital-SanDisk merger brings together the third and eighth players, respectively, in storage (which usually isn’t problematic from an antitrust standpoint), regulators can get very granular when they define submarkets.
With the SanDisk-Western Digital merger, the companies expect to generate annual run-rate synergies of $500 million per year within 18 months of closing.
The equity value of the SanDisk-Western Digital merger is about $19 billion using the five-day volume-weighted average price of Western Digital before the deal was announced.
According to the press release, the SanDisk-Western Digital merger is expected to close in the third quarter of 2016. If you assume a closing date of September 30, 2016, then the spread is trading at an annualized rate of 14.5%.
By acquiring SanDisk (SNDK), Western Digital (WDC) aims to improve its market standing as a supplier that could reignite new pricing pressure in the storage market.
With the action on the acquisition front, including the SanDisk acquisition, Western Digital is geared up to increase and enhance its presence in the SSD arena.
To acquire SanDisk, Western Digital has offered SanDisk shareholders $86.50 per share. This is approximately 15% premium to SanDisk’s closing share price on October 20, 2015.
In the previous part of this series, we saw that Seagate Technology’s (STX) lower-than-expected sales could give rival Western Digital (WDC) a competitive edge.
Western Digital (WDC) and Seagate have cutthroat competition in the HDD (hard disk drive) space, with the former accounting for a 43.6% share and the latter for a 40.1% share.
Cash-to-debt ratio measures a company’s financial strength. Apple’s cash-to-debt ratio in 3Q15 is 0.6x, which is lower than the industry median of 1.4x.
Macroeconomic factors like the Greek debt crisis, the declining Chinese stock market, and global growth issues have made tech stocks not so attractive.
According to DRAMeXchange, the NAND flash memory market is expected to grow at 12% in 2015. It is projected to grow rapidly, with double-digit growth, in the next few years.
In this series, we’ll analyze the YTD performance of firms in the Technology, Hardware, and Storage subsector and that are a part of the Technology Select Sector SPDR ETF (XLK).
Micron projected that, in the long-term, the demand for memory products will diversify as a variety of customers will demand different memory solutions.
Micron Technology operates in the capital-intensive industry of semiconductors, wherein companies’ expense structures acutely impact their profit margins.
Intel generated TTM returns of -16.66%, 9.26% in the trailing one month. It generated -20.03% YTD. Its share price fell by 1.53% in the trailing five days.
