Yahoo Finance Western Digital (WDC) & Kioxia Reportedly Pursue Merger Talks
Western Digital WDC and Japan-based Kioxia are holding advanced talks for a probable merger, reported Bloomberg. However, there was no official comment on the matter from either of the parties.
Citing sources familiar with the matter, Bloomberg added that the companies are mulling a possible dual-listing. As part of the deal, Western Digital is likely to spin off its flash unit and integrate it with Kioxia, to create a new publicly trading company in the United States. This will be followed by a second listing in Japan. The combined company would then have a major share of the global NAND flash market.
Kioxia is an industry pioneer and global leader in memory solutions in flash memory and solid-state drives. Toshiba holds a major stake in the company
Western Digital Corporation Price and Consensus
Western Digital Corporation price-consensus-chart | Western Digital Corporation Quote
Last year, the two companies had inked an agreement for jointly investing in the first phase of the Fab7 (Y7) manufacturing facility at the latter’s state-of-the-art Yokkaichi Plant in the Mie Prefecture of Japan.
Headquartered in San Jose, CA, Western Digital is one of the leading hard disk drive producers globally. The acquisition of SanDisk enabled the company to venture into the flash drive storage technology space.
Amid challenging macroeconomic conditions, the company is witnessing weakness in demand for both hard drive and flash products across all segments. Flash demand is under pressure owing to inventory reduction at PC OEMs and lower flash pricing.
To battle macroeconomic uncertainties, WDC is focused on reducing capital investments and operating expenses to better align cash flow and cost structure with market conditions.
Western Digital is scheduled to report second-quarter fiscal 2023 earnings on Jan 31. For fiscal second quarter, the company expects non-GAAP revenues in the range of $2.9-$3.1 billion. Management projects non-GAAP earnings to be between loss of 25 cents and earnings of 5 cents per share.
The company expects non-GAAP gross margin in the range of 20-22%. Non-GAAP operating expenses are expected to be between $650 million and $670 million.
The Zacks Consensus Estimate is pegged at 8 cents loss per share and $3.01 billion in revenues, respectively.
At present, WDC carries a Zacks Rank #4 (Sell). Shares of the company have lost 32.5% compared with sub-industry’s decline of 23.1%.
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Stocks to Consider
Investors interested in the broader technology space may also consider stocks like Arista Networks ANET, Jabil JBL and Pure Storage PSTG. While Jabil sports a Zacks Rank #1 (Strong Buy), Arista and Pure Storage carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.38 per share, up 1 cent in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have declined 5.3% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.37 per share, rising 2.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 27.8% in the past year.
The Zacks Consensus Estimate for Pure Storage’s fiscal 2023 earnings is pegged at $1.28 per share, up 8.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 21.3%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 156%. Shares of PSTG have declined 1.4% in the past year.
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