Barclays on U.S. IT Hardware: PCs Weigh on HDDs into Analyst Days; WDC in Better Shape Than STX

Barclays on U.S. IT Hardware: PCs Weigh on HDDs into Analyst Days as Companies Eye
Returning Cash

Analyst, Ben A. Reitzes, said, "Over the next 2 weeks both Western Digital and Seagate host financial analyst days. We believe that both companies will have to balance the residual impact from a very subdued PC market while trying to address forecasts for healthy long-term operating models. Optimism should result from recent industry consolidation and elevated pricing vs. historical levels (albeit declining) - but current checks show C3Q TAM is tracking well below expectations - at around 150mm units vs. our expectations of 158 mm. However, checks indicate much more unit downside near-term for Seagate (Nasdaq: STX) and very little for Western Digital (NYSE: WDC) given crisp execution."

All in, Reitzes expects a much more positive tone from WDC and even sees a dividend announcement in the near future. As for STX, company specific issues, tied in with PC market weakness. Implementing the company's stock buyback plan may be it's only near-term 'saving grace'.

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