Canada Markets closed

Data Storage Companies Generate Solid Cash Flow Up to $800 Million Per Quarter: Expert Analyst Mark Miller Shares His Top Picks in the Space with The Wall Street Transcript

67 WALL STREET, New York - September 13, 2013 - The Wall Street Transcript has just published its Data Hosting Centers and Data Storage Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Data Hosting Centers - Flash Memory - Cloud Computing Secular Trends - Data Center REITs - Colocation, Managed Hosting and Cloud Computing - International Enterprise and Consumer Demand

Companies include: Seagate Technology (STX), Western Digital Corp. (WDC), Hutchinson Technology Inc. (HTCH), Intevac Inc. (IVAC), Micron Technology Inc. (MU), SanDisk Corp. (SNDK), Intel Corporation (INTC), STEC, Inc. (STEC), EMC Corporation (EMC), International Business Machine (IBM) and many more.

In the following excerpt from the Data Hosting Centers and Data Storage Report, an expert analyst discusses the outlook for the sector for investors:

TWST: How healthy are these companies' balance sheets?

Mr. Miller: Western Digital has over $4 billion in cash, twice the amount Seagate holds. Seagate basically has about the same amount of cash as debt. There was a recent judgment that Western Digital is still appealing, a $700 million judgment for some proprietary information that Seagate felt inappropriately went to Western Digital as a result of hiring one of Seagate's engineers. A court has recently upheld an appeal of the judgment.

Investors should note that these companies are great cash flow generators. They can generate anywhere from $400 million to $800 million in free cash flow per quarter, a point I always made to those who were predicting the disappearance of hard drive manufacturers. That's enough cash to buy STEC (STEC), which was recently bought by Western Digital, Fusion-io (FIO) and OCZ Technology (OCZ). They could buy all three firms on one quarter's cash flow. So they are great cash flow generators. I think concentration on their debt situation can be a little misleading to people.

TWST: What are your thoughts on Western Digital's acquisition of STEC?

Mr. Miller: STEC has had its issues. There have been problems with STEC that have clouded the stock and turned people off. Certainly they can be resolved by a change of management. I think the other problem STEC has seen is more competition. It is the dominant enterprise solid-state manufacturer; it's been in there the longest time, but competition is mounting.

Western Digital got STEC very cheaply. Western Digital has a very good track record of buying companies like Read-Rite, which was in bankruptcy; Komag; and of course Hitachi, their largest acquisition, and turning these firms into strong performers. So they have a good record of taking acquisitions and turning them into being accretive and positive for the firm...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.