14 DAY TRIAL // You’d think that the shares of a company that has its factories under water would be dropping in value. Well, usually you’d be right, but when that company holds half of the world’s HDD supply in its pocket, the share price is only going up.
You really need to check out the first and the second part of this series before reading any further.
Investors knew that if there was no competition left, the HDD prices and the rate of development would be at the mercy of the two giant HDD makers.
WD’s share price almost doubled from the $24 it was in October last year and reached a high $44 this May.
This is almost a 100% share price increase, and it was most likely fueled by the company’s own intensive buying of its own shares that sent the price up.
The initial share buyback amounted to more than $2 billion, and once the company stopped buying, the share fell to about $34, but that’s still almost 50% higher than it was just 8 or 9 months before.
Seagate’s shares went from $9 in October to about $32 in May of this year, and that was a 355% increase of the share value.
There’s nothing stopping these two giants setting whatever price they desire for their products, and the authorities did absolutely nothing to stop this from happening.
In fact, the authorities even helped WD negotiate a deal with Toshiba, so that the Japanese small HDD maker would buy some IP and equipment and pose as a third 3.5” HDD maker.
Now, WD and Seagate have a hybrid 3.5” HDD puppet called Toshiba to point at when anybody inquires about the de facto duopoly in the global hard disk drive market.
Getting back to WD’s latest profits, we see the company proudly announcing that they’ve managed to generate a whole $1.1 billion in cash and some more in cash equivalents.
Basically, WD made $3.2 billion in cash equivalents this quarter and spent $584 million in cash to repay a debt and $604 million to buy back even more shares.
Make sure you read the fourth part of our HDD market analysis here, and find out how you’re getting robbed by the HDD makers.
Enjoying Market Manipulation – Western Digital Posts Huge Profits Again – Part 4
