Western Digital Corp (WDC), STEC, Inc. (STEC): Three Reasons You Should Love This Deal

Instead, it will be beneficial, and as an investor, I am highly encouraged by the purchase price in which Western Digital paid to acquire the company.

Final Thoughts

This acquisition does not make Western Digital a leader in the SSD industry, but it gives the company a presence. It gets their foot in the door, and because of the company’s size, all they need is a foot, and then they have the resources available to explode with growth. It gives the company a dual-threat, and an edge over Seagate Technology PLC (NASDAQ:STX).

This is my third takeaway, because neither Western Digital nor Seagate Technology PLC (NASDAQ:STX) have been active in expanding their SSD lineups. In fact, Seagate Technology PLC (NASDAQ:STX) might have been more active, expanding both its consumer and enterprise businesses with SSD integration. But like I said, STEC’s “endurance” and the longevity of its services will benefit those enterprise clients who seek consistency and fewer mishaps of their data; more-so than high-performance.

Over the last six months, Western Digital has been gaining market share while Seagate Technology PLC (NASDAQ:STX) loses its share. It appears as though this acquisition may be a direct attempt for Western Digital to further steal the enterprise business from Seagate Technology PLC (NASDAQ:STX), with a much more effective SSD lineup for enterprise clients with the acquisition of STEC.

With that said, the deal itself is expected to close in Q4, and I would watch for its effect on Seagate in the enterprise business. Also, I’d watch for Seagate to make a big acquisition of its own, possibly OCZ Technology? Overall, I think Western Digital just forced the combination of two storage industries, which should bode well for both them and SSD companies that are waiting to be acquired.

Brian Nichols is long WDC. The Motley Fool owns shares of Western Digital.. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article 3 Reasons You Should Love This Deal originally appeared on Fool.com is written by Brian Nichols.

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