Have you heard the one about Western Digital Corp.?
South Korea’s Samsung Electronics Co. could be interested in buying the disk drive maker, according to a recent column on TheStreet.com.
Perhaps the talk was bound to happen after Western Digital’s rival and the market leader, Scotts Valley-based Seagate Technology LLC, said last year it was buying Maxtor Corp. of Milpitas.
With Maxtor, Seagate will have more than half the market for drives.
That kind of consolidation gets people thinking more could be on the way.
The odds of a Samsung buy of Western Digital could be remote. But the buzz was enough to send Western Digital’s shares up late last month.
Western Digital’s appeal is that it’s one of the most efficient producers in an industry where volume and low costs are key. Consolidation in the form of a Samsung buy could help keep prices up, according to the column.
And Samsung would get more business with computer makers, Western Digital’s bread and butter.
The folks at Seagate might like to see such a deal. Back when Seagate said it was buying Maxtor, Western Digital’s stock soared.
Investors figured Western Digital could get some suppliers to shift orders its way to help cut reliance on one big supplier.
Whatever the case, it’s just a rumor, not unlike those we’ve heard before about Western Digital.
TheStreet.com points out some on Wall Street could be floating rumors to help boost stocks of other drive makers.
A couple of analysts are skeptical. The company’s management just doesn’t seem to be in the mood for a sale, they say.
Western Digital boss Arif Shakeel and Executive Chairman Matt Massengill have put together a formula for profits and growth by letting Seagate and others blaze into new markets. Western Digital then cranks out drives to meet demand.
No Jazz in Oregon
Remember the story about Jazz Semiconductor Inc. possibly buying a chip plant in Oregon?
It ain’t happening.
Earlier this month, Phoenix-based ON Semiconductor Corp. said it is buying Milpitas-based LSI Logic Corp.’s plant in the Portland, Ore., suburb of Gresham.
The company is paying $105 million in cash and keeping most of the workers.
The speculation late last year was that Jazz could be in the hunt for the 500,000-square-foot plant.
Portland’s daily newspaper, the Oregonian, had said LSI received letters of intent from one prospective buyer.
LSI didn’t identify the company. The Oregonian cited industry officials as saying ON and Jazz were among those interested.
Jazz makes chips for Newport Beach-based Conexant Systems Inc., which sold off a majority stake in Jazz in 2002. Jazz also makes chips for Mindspeed Technologies Inc. of Newport Beach,another Conexant spinoff.
Jazz could have eyed the LSI plant as a way to expand into growing markets, including wireless and digital TV chips, an analyst had said.
Keeping Tabs
A quick note on Conexant.
The Newport Beach-based chipmaker has seen its stock do well,and that’s saying something for Conexant, one of the hottest stocks of the past year in Orange County.
The stock recently hit 52-week highs and is up about 20% in the past month. Its market value is sneaking up on $2 billion.
Jim Cramer, a Conexant fan, should get a lot of thanks. But the surge also might have something to do with quarterly results coming up April 27. Analysts are looking for better than 40% revenue growth from the year-ago period and “core earnings” of $9.5 million compared to a year-ago loss.
Auctioned Skipped
Irvine-based Connexion by Boeing, Boeing Co.’s in-flight Internet arm, surprised some by not taking part in a Federal Communications Commission auction for wireless airwaves, according to the Chicago Tribune.
Some thought Boeing would go after the frequencies as an alternative to its system using satellites to deliver Internet access to jets. Using wireless towers is seen by some as cheaper than satellites.
Connexion has spent tens of millions of dollars on its satellite technology.
So far, it’s only been able to land the service for international flights. Major customers are based in other countries, such as Germany and Taiwan.
At stake now is the lucrative North American market. Carriers serving the U.S. and Canada have been slow to sign up for Internet access.
The airlines’ downturn after 2001 has made it a hard sell, according to Boeing.
But with some airlines turning around, the thinking is they’ll open their wallets and buy the systems.
The land-based systems use wireless towers to beam up signals to planes instead of satellites that beam the signals down. The land-based systems might even be able to handle more data.
