Western Digital (WDC), the largest player in the disk drive business, announced acquisition of the number three player Hitachi GST (HIT). The real winners are not Western Digital or Hitachi, but two other companies.
Seagate Technology (STX) is the second largest hard disk manufacturer with about 30% market share. Western Digital and Hitachi combined will have about 48% market share.
Many of the large buyers of the hard drives, as a matter of policy, insist on a second source. The purpose of this policy is to maintain leverage against the vendors and not be severely impacted by supply chain disruptions at one vendor. Western Digital and Hitachi have been the second source for a large chunk of the market. With Hitachi being acquired by Western Digital, the remaining vendors are likely to receive increased second source business. The market share of the Western Digital and Hitachi combine is likely to drop.
We will initiate a long position only when all six screens of the ZYX Change Method are met. Tentatively, under the most probable scenario, all six screens may be met and a buy signal issued to start scaling in around $11.85. According to the ZYX Change Method Trade Management guidelines, following are the tentative zones:
Buy Zone: Available to ZYX CHANGE ALERT BUY subscribers
Long-Term Target Zone: Available to ZYX CHANGE BUY ALERT subscribers
Short-Term Target Zone: Available to ZYX CHANGE BUY ALERT subscribers
Stop Zone: Available to ZYX CHANGE BUY ALERT subscribers
Our computers will be monitoring every tick of Seagate and automatically feeding data to algorithms. We will provide actionable signals to the subscribers of ZYX CHANGE BUY ALERT in real time.
Marvell (MRVL) garners about half of its business from disk drive semiconductors. Western Digital is one of the largest customers of Marvell. Now Marvell is likely to find increased opportunities in acquired business of Hitachi. These opportunities are likely to come to fruition rather quickly.
Prior to this development, ZYX Change Method was close to giving a buy signal to start scaling in Marvell if the stock dipped to around $14.30 without material negative money flow. Now the fundamental case for Marvell is stronger.
Our computers will be monitoring every tick of Marvell and automatically feeding data to algorithms. We will provide actionable signals to the subscribers of ZYX CHANGE BUY ALERT in real time.