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Print 31 comment(s) - last by Souka.. on Mar 8 at 3:20 PM

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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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:
WD
Seagate, who bought out Maxtor, who bought out Quantum
Samsung
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
Zactly.

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.


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