STOCKWATCH: Slowing growth, but still growing
STOCKWATCH: Slowing growth, but still growing
Seagate's mostly solid performance last week in its reintroduction to Wall Street was maintained this week, as the storage industry gradually shut down for the Christmas break.
Seagate's stock started trading again last week after being sold at US$12 per share. The price went as low as US$10.95 during the week, before closing at US$11.20 overnight. While the performance of the float did not match those of its peers who cashed in on the dot com boom when the going was good - being described in various media as suffering a "poor reception", being "sluggish", and failing "to drive much interest" - the offering was oversubscribed, and the company added US$870 million to its war chest for acquisitions.
The company tried to cheer up its newly recruited investors during the week by announcing that it would offer quarterly dividends of three cents per share, although it did not seem to have much effect in a market dominated by talk of war and rising oil prices.
Amongst Seagate's peers in the hard disk drive manufacturing sector, Maxtor remained very level during the week, hovering just under the US$6 mark and closing overnight down 5.4 per cent to US$5.56, while Western Digital held at around the US$7 mark to finish Wednesday down six per cent to US$6.48. According to current market prices, Seagate Technology is valued at around US$4.77 billion, more than tripling Maxtor's value of US$1.34 billion and Western Digital at US$1.25 billion.
On the ratings front, McData enjoyed some good news this week - rare for the company and its competitors in the storage networking industry such as Brocade and Inrange, which are all warily eyeing Cisco's entry into their niche. Analyst firm CE Unterberg Towbin cut its forecast for both the long term and the short term for McData's stock from Market Perform to Buy. McData's stock plumbed depths of below US$5 during October, but has spent the last week well above US$7, only dipping below it again overnight to US$6.94.
The biggest movers overnight were EMC and Network Appliance, which lost eight and nine per cent respectively. EMC closed at an even US$6, a barrier which it has not breached for over a month during a run that saw it go as high as US$7.69. The company will need some investor support to avoid dipping back to 52-week lows it explored below US$4 in October. Similarly, Network Appliance closed at US$11.10, with the US$11 mark being the one it has managed to keep above for a month or two. Its worst recent times were also in October, going below US$5.50.
Many other storage companies recorded daily losses around five per cent on Wednesday US time, with the solitary gainer being BakBone Software - and that was only by two cents to US$0.80.