NEW YORK, May 16 (Reuters) - Shares of disk drive makers Seagate Technology and Western Digital Corp are trading at bargain prices, but they could rise 50 percent in the coming year, Barron's said in its May 17 edition.
Seagate trades at around $18, only five times its projected profit for the year ending June 30. Western Digital trades at around $38, six times its estimated profit. These are two of the lowest price-to-earnings ratios in the technology industry, according to Barron's.
The two companies each have about 30 percent market share. Overall the industry is expected to generate more than $30 billion in revenue this year, up 20 percent from last year, as more PC users buy external disk drives for file back-ups or to download music and videos from other computers, said Barron's.
Skeptics point to the historically volatile nature of the business and the fear that flash drives, such as those used in iPods, will make bulky disk drives obsolete.
However, Barron's said the industry has been helped by consolidation that has shrunk the number of producers from 12 to five over the past decade.
(Reporting by Helen Kearney, editing by Maureen Bavdek) Keywords: WESTERN DIGITAL/SEAGATE (helen.kearney@thomsonreuters; +1 646 223-6124; Reuters Messaging: helen.kearney.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Seagate trades at around $18, only five times its projected profit for the year ending June 30. Western Digital trades at around $38, six times its estimated profit. These are two of the lowest price-to-earnings ratios in the technology industry, according to Barron's.
The two companies each have about 30 percent market share. Overall the industry is expected to generate more than $30 billion in revenue this year, up 20 percent from last year, as more PC users buy external disk drives for file back-ups or to download music and videos from other computers, said Barron's.
Skeptics point to the historically volatile nature of the business and the fear that flash drives, such as those used in iPods, will make bulky disk drives obsolete.
However, Barron's said the industry has been helped by consolidation that has shrunk the number of producers from 12 to five over the past decade.
(Reporting by Helen Kearney, editing by Maureen Bavdek) Keywords: WESTERN DIGITAL/SEAGATE (helen.kearney@thomsonreuters; +1 646 223-6124; Reuters Messaging: helen.kearney.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.