Seagate Technology PLC (STX) & Western Digital Corp. (WDC): The Ultimate Value Traps

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Seagate, Western Digital’s exposure to the HDD market

Ultimately, both Seagate Technology PLC (NASDAQ:STX) and Western Digital Corp. (NASDAQ:WDC) remain primarily hard drive companies, with large exposure to the traditional PC market. In calendar year 2011, 73% of Western Digital’s products were used for desktop or laptop computers. Likewise, almost 90% of the hard drives Seagate shipped last quarter were to non cloud-based customers.

Although the shift to the cloud will create some offsetting demand, it might not be enough to make up for the decline of traditional PCs — still the primary market for Western Digital Corp. (NASDAQ:WDC) and Seagate Technology PLC (NASDAQ:STX).

HDDs are on their way out

PC components come and go. One would be hard pressed to find a working PC with a floppy drive, for example, while optical (CD) drives are absent from many modern laptops (and even some cars).

Hard drives appear poised to follow, much to the chagrin of Seagate Technology PLC (NASDAQ:STX) and Western Digital Corp. (NASDAQ:WDC) shareholders.

Sam Mattera is short shares of Seagate Technology (NASDAQ:STX). The Motley Fool owns shares of Western Digital..

The article Seagate & Western Digital: The Ultimate Value Traps originally appeared on Fool.com.

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