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Dealis subject to regulatory approval

Western Digital is one of the largest firms in the traditional hard drive manufacturing realm. Other notable companies in the HDD market include Hitachi GST and Seagate. Western Digital has announced that it has entered into an agreement to purchase Hitachi GST and combine its operations.

The deal was announced today and will cost WD about $4.3 billion. The transaction will be paid with $3.5 billion in cash and 25 million WD common shares valued at about $750 million. Hitachi will also get to place two representatives on the WD board of directors. The stock will mean that Hitachi Ltd will own about 10% of all outstanding WD stock.

The deal still has to get regulatory approvals and is subject to other customary closing conditions as well. WD will take out $2.5 billion in new debt to pay the cash portion of the deal. According to WD, it expects the purchase to immediately start contributing to its earnings per share on a non-GAAP basis after excluding the acquisition expenses, restructuring charges, and other costs.

The merged companies will continue to operate under the Western Digital brand and will continue to be headquartered in Irvine, California. WD CEO will remain John Coyne and the COO will be Tim Leyden with Wolfgang Nickl as CFO. There are no changes in the WD senior staff. Hitachi GST president and CEO Steve Milligan will move to WD as president reporting directly to CEO Coyne.

"The acquisition of Hitachi GST is a unique opportunity for WD to create further value for our customers, stockholders, employees, suppliers and the communities in which we operate," said John Coyne, president and chief executive officer of WD. "We believe this step will result in several key benefits-enhanced R&D capabilities, innovation and expansion of a rich product portfolio, comprehensive market coverage and scale that will enhance our cost structure and ability to compete in a dynamic marketplace. The skills and contributions of both workforces were key considerations in assessing this compelling opportunity. We will be relying on the proven integration capabilities of both companies to assure the ongoing satisfaction of our customers and to bring this combination to successful fruition."

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Just hope this doesn'thave a negative effect
By ElementZero on 3/7/2011 10:40:12 AM , Rating: 2
Western Digital makes GREAT drives - I literally have never had one die on me (and trust me, I've had dozens of their drives). Hitachi though...well, there is a reason why the DeskStar line is also referred to as the DeathStar line. In fact I've probably used about a dozen Hitachi drives...don't think a single one made it more than a couple years.

Not sure why that is, but just hoping that the crap of Hitachi's line doesn't make it into the excellent quality of the Western Digital drives.

RE: Just hope this doesn'thave a negative effect
By dijuremo on 3/7/2011 10:51:53 AM , Rating: 2
I literally have never had one die on me (and trust me, I've had dozens of their drives).

The experience with Hard drive is extremely relative, most of the of the WD drives I have used, have had issues. If I compare the smaller batch of WD's I have ever used vs the large quantities of Seagates, I am sure the failure rate of WD is higher than Seagate (In my experience based on the drives I have used, tens of WDs vs Thousands of Seagates).

I think Hitachi drives are also good and while they used to be IBM, and I had those fail as well, I would still now prefer to buy a Hitachi over a WD (even when my inlaw works at WD :).

By Chaosforce on 3/7/2011 2:36:59 PM , Rating: 1
Hard Drives i would say are based on time, each hard drive manufacture had its "shit" period where hard drives where more prone to brick or fail. Currently id say WD is in its good age, while Seagate is getting out of its shit(large Bach of some of their drives had bricking issues about 1-2 years ago, where apparently there was a fix coming out for....but it was to late for my drive.)

By Mitch101 on 3/7/2011 3:06:00 PM , Rating: 2
I sort of agree with you because Im not too fond of Seagate drives over 1TB but Motherboard/External Case chipsets and drivers play a role in those mistaken failure rates where its easy to blame the hard drive when it doesnt work.

As for hitachi I had 3 of those deathstar drives it wasn't just the failure rate of the drives but how I was told they weren't under warranty. One I still had the box for and they told me it was OEM. I ate the cost and never looked at them again.

Samsung has really grown on me as a hard drive maker. Not a single problem with them. Western Digital Im cautious but they have been more than great at replacements when there is a problem. Love their black series of drives.

Cant speak for toshiba but they are still out there. I remember a lot of them would die on laptops but that was a while ago.

Iomega sometimes doesnt play well with my external USB SATA drive dock for some reason.

By Samus on 3/7/2011 3:02:57 PM , Rating: 3
I just pulled a 6GB Maxtor hard drive from a Windows 98 PC (drive manufactured in 1998) that STILL ran an on-screen take off program for a plumbing company. It still worked. I transfered the data to a new computer as they've FINALLY upgraded to new software that runs on a modern, one that at least supports USB removable drives (this wasn't even 98se)

I'm as shocked as you are. It's amazing to think Maxtor actually made decent drives over a decade ago.

So yes, hard drive 'luck' is extremely relative. Who knows, somebody ou

By Samus on 3/7/2011 3:02:57 PM , Rating: 1
I just pulled a 6GB Maxtor hard drive from a Windows 98 PC (drive manufactured in 1998) that STILL ran an on-screen take off program for a plumbing company. It still worked. I transfered the data to a new computer as they've FINALLY upgraded to new software that runs on a modern, one that at least supports USB removable drives (this wasn't even 98se)

I'm as shocked as you are. It's amazing to think Maxtor actually made decent drives over a decade ago.

So yes, hard drive 'luck' is extremely relative. Who knows, somebody ou

RE: Just hope this doesn'thave a negative effect
By tamalero on 3/7/2011 10:52:15 AM , Rating: 2
I dont see the problem, the Deathstars were when IBM was the owner. and most of the problems were on their 15,000 rpm line.
Havent seen many people complain about HITACHI's ones.

By vapore0n on 3/7/2011 11:29:48 AM , Rating: 1
I think its because people learned from their mistakes and decided to not purchase any more deskstar drives.

I sure did and banned IBM/Hitachi's drives from my computers.
I had to replace the same drive 3 times (2 came ibm branded, 1 hitachi) to learn my lesson.

By Nutzo on 3/7/2011 11:25:58 AM , Rating: 3
Funny how fanboys always bring up "DeathStar" from 10 years ago when IBM owned the brand.

Between home and the office I have over 200 drives in use.

I've never had a Hitachi drive go bad, or even an IBM.
I've had couple WD drives die (one at home after about 8 years of use)
I've had several Seagate drives have died, and over 50% of the Maxtor drives have died (including both of the Maxtors I at home)

The Hitachi UltraStar (enterprise class) drives are great, and are my 1st choice for 2TB server drives. Too many complaints/problems with both the WD RE4 and the Seagate drives.

RE: Just hope this doesn'thave a negative effect
By CZroe on 3/7/2011 11:44:07 AM , Rating: 3
I've had multiple drives fail from every manufacturer. I, too, was "bitten" by IBM's "Deathstar" fiasco many times and still have a non-functional IBM Deskstar 60GXP around to prove it. Even so, I greatly prefer Hitachi drives to Western Digital. Hitachi and IBM never resolved the 60 and 75GXP issues to my satisfaction, but they certainly corrected it for future products. They do seem to be a bit more fragile than other brands (DON'T DROP IT!) but I have owned 25 of their top-of-the-line drives in the last 7 years and have only had random failures from other manufacturers. That's not to say I haven't had failures with Hitachi drives since, like when my nephew yanked on a cord during a file transfer (external drive came crashing down) or when a neighbor kicked his computer, but they have other more direct causes. I've had Toshiba, WD, Fujitsu, Samsung/Trigem, Seagate, all fail randomly multiple times in the same time frame. Now that Hitachi uses accelerometers to park the heads in mobile drives, I rely on them more than ever.

By myhipsi on 3/8/2011 9:44:13 AM , Rating: 2
Funny, I still have a fully functioning 60GXP in one of my office PCs. My overall experience with HDD manufacturers have been lucky I guess. I've had at least 30 HDDs from Maxtor, Seagate, WD, Hitachi, and Samsung over the years and have had absolutely zero fail on me. (knocks on wood) :)

RE: Just hope this doesn'thave a negative effect
By Motoman on 3/7/2011 12:04:37 PM , Rating: 4
Please. The Deskstar line only had problems when it was an IBM trademark. No such problems have existed since Hitachi gained those rights a very long time ago.

Hitachi makes quality equipment...I build lots of computers, and therefore use lots of hard drives, and have found no significant difference in reliability among any of the major manufacturers...Seagate, WD, Samsung, or Hitachi.

Please keep your trolling to yourself.

By UNHchabo on 3/7/2011 12:59:38 PM , Rating: 2
Please keep your trolling to yourself.

Trolling would imply that he has no actual problem with the Deskstar line, but chose to spread FUD regardless. At worst I'd say he's misinformed.

By GladeCreek on 3/7/2011 3:07:32 PM , Rating: 2
I really believe all manufacturers have more or less the same failure rate.... however..

I've had 9 WD drives fail over the last 18 months, BUT I have never had a WD drive lose data. They seem to always predict the failure and drop out of the array long before a real problem, the RMA process couldn't be easier or quicker, and in every case a replacement arrived before any data loss.

Contrast that with Seagate.. ugh. I have had 3 data losses with Seagate. Two were multiple drive failures in RAID 5 (within days) before a replacement arrived. Both resulted in bare metal restores from tape. In all 27 Seagate failures in 14 years.

I'll take WD over Seagate any day.

By bigboxes on 3/7/2011 1:21:51 PM , Rating: 2
Give me a break. DeathStar? Fanboi much? You do realize that was ten years ago when IBM owned the line. And even then it was just one model in their line. In fact, I had to replace 6 of those drives under warranty. I've owned a lot of drives in my day and they ALL have drives that died. I had a WD drive die, taking with it a lot of unrecoverable video. What did I learn from that? No, I did not stop buying WD drives. What I did was to start backing up my data. It's more expensive than just having your data on a single drive, but you're an idiot if you believe that <insert favorite brand here> will never die. Eventually, your drive dies or you experience data loss/corruption.

By cubdukat on 3/8/2011 3:00:04 PM , Rating: 2
Western Digital makes GREAT drives - I literally have never had one die on me (and trust me, I've had dozens of their drives)

I, unfortunately, have not been so lucky. I have had two of their Green Caviar drives die (a retail model and its refurb replacement), and two 1TB Hitachi OEM's die. I haven't even gone to Seagate in years, because when they took over Maxtor, they seemed to bring all their issues with them.

That being said, I would have no problems giving any of these three another chance. Both my main drive and my video capture drive are the same Hitachi 1TB models that gave out previously. They've both been in for over a year with no problems at all. As far as the Green Caviar models, they probably shouldn't be used as HTPC drives anyway.

Less companies, less competition
By Ionizer86 on 3/7/2011 10:50:39 AM , Rating: 2
If WD buys out HGST, who do we have left? Toshiba doesn't make 3.5" hard drives and I don't think they've made any recent 2.5" drives either. I haven't seen a Fujitsu-Siemens 3.5" drive.
That leaves:
Seagate, who bought out Maxtor, who bought out Quantum
Any more?

With such few competitors, what prevents WD from keeping prices high and slowing down innovation? This could potentially be pretty bad for consumers :(

RE: Less companies, less competition
By corduroygt on 3/7/2011 11:03:43 AM , Rating: 2
There's only Intel and AMD in the CPU market, and only ATI (AMD) and NV in the GPU market. Innovation hasn't slowed down in those areas. If WD slacks off, then Seagate and Samsung will pick up the slack.

RE: Less companies, less competition
By Flunk on 3/7/2011 12:21:40 PM , Rating: 2
I would disagree with that, CPU technology is pretty stagnant right now. The per core performance difference between the Core 2, i7 and new i7s isn't very big. Sure, they're tacking on a few more cores but it's not really helping in most cases.

RE: Less companies, less competition
By HrilL on 3/7/2011 1:11:31 PM , Rating: 2
That's mostly due to software limitations and not being able to support the use of more than 2 cores and 4 core in some cases with new software. So the point of having a 6 or 8 core cpu for a desktop is pointless until software catches up. As for on the server side. I see great performance gains just about every architecture change and with getting more cores. Running private clouds (virtual machines) adding a few more cores allows me to have more instances(virtual machines) per server.

By Souka on 3/8/2011 3:20:57 PM , Rating: 2

I'm at an engineering company right now... the recommended CPU for our "heavy" apps is basically the highest MHz you can get. Dual core, quad core, i3, i5, i7...HT...not critical as MHz.

Example: A program called Ansys running an analysis takes 5hours on regular 3.33GHz C2D or i5 desktop and 6.5hours on a i7 @2.53GHz desktop with same drive/os/video setup. This is almost a direct scaling of CPU MHz.

These apps are 2010/2011 releases too..64bit native.

By corduroygt on 3/7/2011 2:56:04 PM , Rating: 2
That's because it's tough to do so without increasing power, so increasing performance while disregarding power wasn't on the agenda. Performance per watt has consistently improved from conroe to sandy bridge.

RE: Less companies, less competition
By dice1111 on 3/7/2011 11:09:18 AM , Rating: 3
Until the rotating drive slowly get phased out in favor of SSD's as they become more affordable and larger in capacity.

It seems everyone and their grandma is getting into that market.

It may take a while but competition will be large & demand will increase and it will be a great thing for consumers.

Demand for HDD’s will shrink and the market will become unprofitable. Maybe Hitachi sees the light?

RE: Less companies, less competition
By mindless1 on 3/7/2011 2:51:41 PM , Rating: 2
Consumers are increasing their storage needs faster than SSD capacity increases and in fact there are not enough flash chips made (after mobile devices get the lion's share) to replace HDDs in the near future.

That "someday" this will change, is not a reason to get out of the business now. For example there are still ICE automobiles made, yes?

By someguy123 on 3/7/2011 6:11:36 PM , Rating: 2
automobiles haven't advanced nearly as quickly as computing technology, and aren't nearly as "easy" to replace.

I believe there's a quote on this site that says something like "If cars advanced like computers, we'd be getting 100,000MPG and they would explode at random about once a year."

RE: Less companies, less competition
By DanNeely on 3/7/2011 11:19:47 AM , Rating: 2
newegg lists significant numbers of HP (desktop) and Toshiba (laptop) branded drives, along with smaller numbers by a number of other makers. Are these all just rebadges?

By Motoman on 3/7/2011 12:38:38 PM , Rating: 2
In the case of HP, definitely. I can't say for sure about Toshiba...but I'd say almost certainly.

Pretty sad
By Murst on 3/7/2011 5:30:42 PM , Rating: 2
I can't believe the WD shareholders would approve of such a huge payment for outdated technology.

SSDs are already out and they're dropping in price like crazy. Hitachi saved themselves from going through bankruptcy in a few years because they didn't get on the SSD train. WD will most likely file in a few years, although this acquisition may bring it sooner rather than later.

RE: Pretty sad
By vol7ron on 3/7/2011 7:50:47 PM , Rating: 2
WD doesn't need to get into the SSD market, but they should look at the hybrid market.

As HTPCs become more-and-more of a reality, the demand for more and more storage will also increase. This need for more space will be heightened if these HTPCs include tuner cards w/ recording capabilities.

As these drives become cheaper I could see RAID1/5 becoming more and more prevalent in default setups. The market is still there, but the easiest way to get around the speed limits is to slap on some NAND or RAM to get around the mechanical limitations.

By CZroe on 3/7/2011 11:50:01 AM , Rating: 2
Maxtor/Quantum/Seagate, Hitachi/IBM, Samsung/Trigem, and now Western Digital/Hitachi/IBM.

At least I knew where to go for IBM technology after the previous sell-off, but now I'm left wondering if their products are going to mostly be a continuation of Hitachi's tech, WD's tech, or a functional combination of the two. I just don't want them to kill it with their Green Power initiative. :(

FWIW, WD and Hitachi have long been my favorite brands because they were the last to ditch the ability to remap bad sectors to spare sectors with a utility (I can't rely on SMART).

How about competition?
By haukionkannel on 3/7/2011 5:10:14 PM , Rating: 2
The bad thing may be that there are less HD manufactures, so less competition? SSD has not come competitor yet in prize segment even it has proven to be superior in other fronts.
Maybe HD companies are preparing themselves to dimishing HD sells because in 3-4 years (hopefully) the SSD can compete allso in the prize segment. Normal home user needs something like 250 Gb or even less, so SSD can soon be best alternative to them. Multimedia users with several terabytes of AV-material are still bound to cheaper HD technology for a long, long time...
But in short term I am a little bit worried about the HD prizes. Do they continue to go down with the same speed as before or is the pace getting slover?

"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007

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