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Wed, May 2, 2012

Market Softening for Disk-Drive Makers


Published on 2012-05-02 05:29:00 - Market Wire
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May 02, 2012 08:20 ET

Market Softening for Disk-Drive Makers

Five Star Equities Provides Stock Research on EMC Corporation and Silicon Motion Technology

NEW YORK, NY--(Marketwire - May 2, 2012) - 2011 was an eventful year for the Data Storage Devices Industry as major floods in Thailand disrupted the production and supply chain of disk-drives. The lack of supply drove disk-drive prices higher and as a result increased companies' profits. But recent comments by Western Digital have many investors believing disk-drive prices will drop back to pre-flood levels. Five Star Equities examines the outlook for companies in the Data Storage Devices Industry and provides equity research on EMC Corporation (NYSE: [ EMC ]) and Silicon Motion Technology Corp. (NASDAQ: [ SIMO ]).

Access to the full company reports can be found at:

[ www.FiveStarEquities.com/EMC ]
[ www.FiveStarEquities.com/SIMO ]

Thailand is home to a large portion of the world's production of disk drives, flooding in Thailand began in late July and continued through the rest of 2011. Many production facilities were destroyed in the floods, and as a result created a shortage in supply. Seagate was one of the biggest benefactors of the flooding as the company's margins jumped 18 percent for fiscal Q2 and 27.5 percent in fiscal Q3. But Western Digital's fiscal Q3 report suggests that demand for disk-drives is slowing. The company forecasted the total worldwide market for drives this quarter to be between 155 million to 160 million units, well below street expectations of 170 million units. Western Digital CEO John Coyne recently stated that "prices are lower in the June quarter than they were in the March quarter."

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EMC reported strong financial results for the first quarter of 2012, marking the company's ninth consecutive quarter of achieving year-over-year double-digit growth for consolidated revenue, net income and EPS. First-quarter consolidated revenue was $5.1 billion, an increase of 11% compared with the year-ago quarter. First-quarter GAAP net income attributable to EMC increased 23% year over year to $587 million.

Silicon Motion shares fell sharply Friday. The company described a rough business environment going forward. "Retail demand for memory cards and end demand for smartphones sold with bundled cards -- other than those sold by certain OEMs -- have been weak. We expect this weakness to impact our business in the second quarter," Silicon Motion CEO Wallace Kou said in the earnings statement.

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