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Considering the ongoing muted PC demand, hard disk maker Western Digital Corporation ( WDC - Analyst Report ) has been compelled to cut its sales and total available market (TAM) forecast for its fiscal first quarter.
Currently, the company expects revenues to be in the range of $3.9 billion to $4.0 billion, which is substantially down from the previous revenue estimate of $4.2 billion to $4.3 billion.
The estimate revision from the hard disk manufacturer comes as no surprise since rival Seagate ( STX - Analyst Report ) and chip maker Intel (INTC) also lowered estimates recently for the same reason.
Western Digital expects the weakness in PC demand to have a significant impact on the overall market for hard disks. The company currently expects quarterly shipment to drop to 140 million units from 157 million guided previously. Of course we expect improved mix from the addition of Hitachi’s Global Storage Technology business to have a positive impact on the gross margin.
Many industry experts are slowly revising their expectations downward based on the weak demand for PCs.
The company’s international business and the overall demand for its products are gradually improving however, owing to which it is expected to generate better revenue going forward.
This apart, the Hitachi deal is expected to strengthen its foothold in the data storage business. Although the company has been able to handle competition efficiently, competition from Seagate Technology plc, Fujitsu Ltd, Samsung and Toshiba keeps its on its toes.
The company has a Zacks #2 Rank (implying a short-term Buy rating).
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