Analysts are upbeat on Irvine-based Western Digital Corp.
The disk drive maker is in the process of buying Silicon Valley’s Hitachi Global Storage Technologies Ltd., which one analyst sees as a big profit driver.
Western Digital also is benefiting from upbeat words earlier this month from key rival Seagate Technology LLC of Northern California.
On April 8, Seagate upped its revenue forecast for the recently ended quarter and reinstated a dividend for the first time since 2009.
After Seagate’s news, Craig-Hallum Capital Group LLC analyst Christian Schwab upped his rating on Western Digital from “neutral” to “buy.”
“We believe industry conditions are better than previously anticipated,” Schwab wrote in a research note to clients.
Western Digital could follow suit with a shareholder dividend as well, said analyst Shebly Seyrafi of Capstone Investments.
The company stands to benefit from industry consolidation and higher prices for drives in the wake of Japan’s earthquake, according to the analysts.
Western Digital is the top maker of drives by shipments. Seagate is tops in revenue with more sales of corporate drives.
Last year, Western Digital sold 204 million drives for 31% of the market, according to El Segundo-based market researcher iSuppli Corp., a unit of Colorado’s IHS Inc.
Seagate sold 195 million drives for 29.7% of the market.
More pricey drives helped Seagate log $11 billion in revenue last year, versus Western Digital’s $10 billion.
The Hitachi buy, set to close in the third quarter, stands to make Western Digital No. 1 by any measure.
Hitachi is the No. 3 drive maker and is set to give Western Digital 49% of the market.
The deal also stands to boost Western Digital in corporate drives. Hitachi GST is a big player in drives used by banks, retailers and others that need to store vast amounts of data.
The acquisition could help Seagate as well by providing for stable prices in an industry that has seen its share of booms and busts.
Seagate could see “collateral benefits in share and pricing from the Hitachi acquisition,” said Needham & Co. analyst Richard Kugele.
Ingram’s Focus
Ingram Micro Inc. Chief Executive Greg Spierkel reiterated his company’s focus on corporate data centers, cloud computing and mobile devices at a conference last week.
The company, the largest distributor of technology products, is about two-thirds through a significant tech buying cycle that should last another six months to a year, Spierkel said at the VentureTech Spring Invitational conference in Chicago.
“Last year the overall IT market through distribution increased 14% in North America,” Spierkel said, according to a report by Computer Reseller News. “Those are numbers we haven’t seen in the market in a long time.”
Ingram supplies products from Microsoft Corp., Cisco Systems Inc. and others to what are known as value-added resellers—consultants that install and maintain technology products for businesses.
The company, the county’s largest by revenue, saw its business rebound last year after a tough 2009.
Ingram posted sales of $34.6 billion, up 17% from a year earlier and the company’s strongest growth since 1999.
Profits, ever slim at Ingram, were up 57% to $318 million, a record.
Corporate data centers of servers and data storage computers are expected to see upgrades, according to Spierkel.
Ingram also hopes to be the leading “aggregator” for cloud computing services. That’s where companies outsource the storage of their data.
The iPad and its growing cadre of imitators stand to be another source of growth, Spierkel said.
“The number (of tablets solid) will increase from 20 million last year to 55 million units in 2011 and over 100 million next year,” he said.
Kofax Unit Sale
Irvine’s Kofax PLC, a maker of software that helps businesses cut down on paper and data entry, has seen the sale of a European division that distributes scanners and servers delayed.
The sale, announced in January, now is expected to wrap up in May. It had been scheduled to close in March.
Kofax is selling the business to Germany’s Hannover Finanz GMBH for $23 million. The business is set to change its name to Dicom International AG and will be run by Joachim Froning, who was senior vice president of hardware distribution sales at Kofax.
Legal and regulatory work on the deal is taking longer than originally thought.
There’s little risk of the deal not going through, according to Graeme Clark, an analyst with Jefferies & Co.
Kofax makes scanning software used by businesses to get rid of paper and speed up productivity.
The software collects paper documents, forms, invoices, email and photos and organizes them into a searchable database of files.
Kofax, which got its start in Irvine in 1985, has about 400 workers here and some 1,200 in all. It sees about $350 million in yearly sales. Its shares are publicly traded in London.
