Western Digital buys SanDisk for $19 billion

[Arthur]

Source: Western Digital (via Ars Technica)

 

Hard drive maker Western Digital has struck a deal to buy flash storage vendor SanDisk for $19 billion (~£12.3 billion), the companies announced today. Subject to a SanDisk shareholder vote and regulatory approval, the merger is expected to close in the third quarter of 2016.

 

Western Digital said it is seeking to boost its expertise in non-volatile memory, with SanDisk's NAND flash giving the buyer "long-term access to solid state technology at lower cost."

 

Western Digital's WD brand sells the My Book, My Cloud and My Passport drives to consumers, while the company's HGST subsidiary sells to OEMs and other businesses. SanDisk's flash memory products are sold to consumers, businesses and device makers. Western Digital pointed out that itself and SanDisk have more than 15,000 patents and "complementary product lines, including hard disk drives, solid-state drives, cloud data centre storage solutions and flash storage solutions."

 

SanDisk will continue its long-time joint venture with Toshiba, the merger announcement said.

 

SanDisk announced its quarterly financial results today, with its revenue of $1.45 billion (£0.94 billion) representing a decline of 17 percent year-over-year. Net income was $133 million (£86 million), down from $263 million (£170 million) in the same quarter the previous year.

 

Western Digital reported $3.2 billion (£2.07 billion) of revenue and net income of $220 million (£142 million) in the quarter that ended July 3, down from $3.7 billion (£2.4 billion) and $317 million (£205 million) year-over-year. The company announced preliminary results for the most recent quarter today, with quarterly revenue of $3.4 billion (£2.2 billion) and net income of $283 million (£183 million). (Full results will be detailed next week.)

 

While both Western Digital and SanDisk's earnings reports were better than expected, Western Digital's share price dropped on news of the merger and has lost about a third of its value this year, The Wall Street Journal wrote. "Western Digital is facing challenges to its core hard-disk-drive business, which has been under pressure from the success of sales of Apple Inc.’s iPad and other tablet computers that store data on flash-memory chips rather than on magnetic disks," the Journal report said. Buying SanDisk "could be a hedge and a driver of new growth."

[comrade]

Don't they have Seagate as well. Hopefully this will mean a good uptake of SSD.

[Arthur]

Don't they have Seagate as well.

Nope. Seagate are a completely separate company.

[Norphy]

Western have HGST. Seagate have Samsung and Maxtor. It's annoying that's there are only two hard drive manufacturers left in the consumer space but there you go...

[Arthur]

One good thing about this acquisition is that WD can switch from using rubbish JMicron controllers in their SSHDs to SanDisk's.

 

Seagate have Samsung and Maxtor.

Just Samsung's hard drive division though. Seagate would never be able to afford Samsung itself.

 

It's annoying that's there are only two hard drive manufacturers left in the consumer space but there you go...

Three if you count Toshiba.

 

http://i.imgur.com/KjF6Fxe.png

Edited October 21, 2015 by Arthur

[sonofsanta]

Not overly surprised it's come to this; like the networking giants missing the boat on wireless and buying their way in (HP with Meru, Cisco with Meraki etc.), the hard drive giants missed the SSD boat and need to buy in now. I can see Seagate buying Kingston or Plextor (Toshiba already own OCZ) within the year.

[localzuk]

This seems like a sensible move by WD, as they definitely have been lacking in the SSD space. That said, SSDs may be popular, but they are still far from the majority of devices sold - so realistically, WD didn't miss the boat. They've bought in at around the right time. They have bought in after the initial teething problems in the market have disappeared, but whilst the companies are still "small" enough to take over.

 

I am really hoping that Seagate do not buy Kingston! Can't stand Seagate, so don't want them to ruin my favourite SSD company!

[Arthur]

I can see Seagate buying Kingston or Plextor within the year.

Kingston would be more likely since they have used SandForce controllers in their SSDs in the past and Seagate owns SandForce.

 

Plextor buy their NAND from other companies and aren't a particularly popular brand when it comes to SSDs so I can't see anyone wanting to buy them (other than Philips & Lite-On).