7 ms·

Western Digital agrees to buy SanDisk for about $19B

167 points by jsnathan 11y ago

jordancj 11y ago
These companies both sound like bad western tech crossover movies from the 80's. This was bound to happen.
sschueller 11y ago
This sucks for consumers. Prices are already way to high for HDs and don't seem to come down anymore. It is as if there is some sort of price fixing going on.
- digitalzombie 11y ago
  Yeah seriously, SanDisk own patents to flash IIRC, their stuff is always less than their competitors. I hope WD isn't going to jack up prices.
  - dogma1138 11y ago
    SandDisk SSD's aren't cheaper, not when you are comparing oranges to oranges, they sell allot of very very low end SSD's their performance series costs more than comparable drives from Samsung. There are other companies that also sell cheap SSD's like Micron and Crucial but the big names Samsung, Intel, OCZ(Toshiba) usually sell quite high end devices. Samsung pretty much blew the market out of the water with their Evo series it comes very close to the performance of it's Pro series and other high end SSD's out there where it comes to real world use at a fraction of the cost. It brought the costs of SSD's down to less than 350$ per TB while keeping outstanding performance and life span.
  - dragontamer 11y ago
    Micron seems to be the cheapest in my experience, aside from TLC crap from Samsung.
  - whoopdedo 11y ago
    I don't think WD has any motivation to increase prices. The point isn't to stop SanDisk from competing with them. They need a SSD product and acquisition is easier for them than developing their own. What I wonder is if WD will continue the green and blue lines. The writing is on the wall for spinning disks. They may reduce the number of HDD models they sell and make SSDs the new green.
  - Sophistifunk 11y ago
    They probably won't. SanDisk already make the most expensive flash drives, as well as cheaper consumer models. But I have a couple of their top shelf drives, like the "Extreme Pro" USB3 stick. They're stupid fast, and worth every penny, assuming it has a long life.
- hga 11y ago
  Hmmm, when did the price decreases stop? I last bought some high capacity drives in 2011 just before the floods in Thailand zapped the industry, and I now note I can buy twice the capacity, 2TB -> 4TB, for $35 less. There could be demand issues, as companies like Amazon, Google, Backblaze, etc. etc. buy them in mass quantities to offer redundant cloud storage. At the other end, SSDs have got to be eating the lunch of small-moderate capacity SAS enterprise drives, and if not now, soon enough the basic sub 1 TB drives that workstations and laptops come with. I'm very conservative with these sorts of things so I avoided jumping on the SSD bandwagon, but a recent failure of one of my Seagate 15K system disks prompted me to buy one of Intel's lowest end, lowest capacity datacenter SSDs (DC S3510 80GB) and I don't think I'm going to be looking back....
  - anoother 11y ago
    Really? Before the flood, I seem to remember you could get a 1TB Samsung F1 7200rpm drive for £30. Now, an equivalent drive will set you back around £35, and it's taken a long time to reach that level...
    - toyg 11y ago
      Physical disks are not going down in price because their market volume is shrinking, their technology is just not evolving. On consumer machines, the 5400rpm drives are being replaced by other 5400 or by SSDs, not by 7200rpm. So the 5400 disks don't go down in price, whereas SSDs do (albeit slowly, due to technological constraints).
      - cdr 11y ago
        I'd say SSDs are going down in price pretty dang fast. The technology is advancing far more rapidly than HDDs could ever dream of. The Samsung 850 EVO 500GB is already ~25% cheaper than the equivalent 840 was a year ago, with better performance. Not to mention the high performance NVMe drives we're starting to see, where the price:performance is even better.
        11y ago
- rincebrain 11y ago
  I just bought a number of 5 TB HDDs on sale for $140, and Samsung has been driving the prices of SSDs down every iteration. I agree it was stagnant for a while, but it's not really static now.
- Eric_WVGG 11y ago
  well if you’d like to look at the bright side, one less decision you have to make
- adventured 11y ago
  You can buy a Seagate 5tb external for $136 on Amazon. I was paying that much for 1tb to 1.5tb just a few years ago. That's a significant improvement. Prices have fallen by half for 1tb (~$50); and at the $125-$135 price point, capacity has increased by ~200%. I fail to see how prices are way too high. Current prices are a steal in my opinion.
- bryanlarsen 11y ago
  Prices of hard drives historically haven't come down. For a very long time consumer hard drives have been between $50 to $200. What changed over time was the size of the drive you could get for $X. That's still happening, but it's happening a lot slower than it used to be.
  - JoeAltmaier 11y ago
    That's an important point. Drives the same size as those 5 years ago go down in price, but at some diminishing rate as they asymptotically approach zero $. With storage its hard to say exactly what its doing, because it won't hold still to be measured. You have to allow multiple variables to change in any stats collected over time (capacity, physical size, speed, volatility). It seems reasonable to chart the price of some standard capacity (most common?) over time. Is that changing any more?
- Igglyboo 11y ago
  I don't think I've seen them ever come down within the past 10 years, all that happens is that storage space goes up and smaller drives stop being produced.
trymas 11y ago
I always have thought that companies were bought for a price of it's market value (stock price * number of stocks), or if someone did not wanted pay all in cash they would've tried to compensate in other ways until market value is reached. But here WD bought SD for ~85-86$ per share, when it was worth ~75$ per share. It's at least 13% more. Does it simply mean that WD hopes that SD will rise in value rapidly? Or I imagined company buying evaluation wrong?
- nashashmi 11y ago
  They issued $18 bln in new debt. Does that mean they only paid $1 bln for it?
  - wjnc 11y ago
    That depends on who issued the debt and what happened after that. If WD issued the debt, they could use that incoming cash to pay the old stockholders to gain the shares in SanDisk. That would be a real cash outflow. Bigger company after the transaction, and bigger debt. Alternative is that WD pays cash to stockholders they might have had lying around. Then issue debt in SanDisk and pay dividend upstream from Sandisk to WD afterwards. Bigger company, and bigger debt result, only different place for the debt. Sometimes tax incentives help which route to choose (private equity often loads up firms on debts, since interest is deductible). Only way to 'pay less' would be (happens sometimes) that you can buy a company that holds a lot of cash, but that has a relatively low valuation one way or the other. Perhaps stockholders sense risks and don't expect dividends (market cap in that sense is expected value of future earnings plus lots of noise). Then you buy company, and use the cash for superdividend right away. Bigger company results, but with relatively stronger solvency since you've paid part from cash that was 'undervalued'.
  - deleted 11y ago
    [deleted]
- hga 11y ago
  When buying a healthy company there's generally a premium required, which is booked as "good will" https://en.wikipedia.org/wiki/Goodwill_(accounting) https://en.wikipedia.org/wiki/Goodwill_(accounting) And all too often written off after the acquisition doesn't pan out.
shas3 11y ago
The consolidation in the semiconductors/chip IP industry, thus far in 2015: 1. Intel-Altera: http://www.bloomberg.com/news/articles/2015-06-01/intel-buys-altera-for-16-7-billion-as-chip-deals-accelerate http://www.bloomberg.com/news/articles/2015-06-01/intel-buys... 2. Avago-Broadcom (and earlier, Avago + LSI): http://www.bloomberg.com/news/articles/2015-05-27/avago-said-near-deal-to-buy-wireless-chipmaker-broadcom http://www.bloomberg.com/news/articles/2015-05-27/avago-said... 3. Silicon Imaging-Lattice: http://www.wsj.com/articles/lattice-to-buy-silicon-image-for-600-million-1422358580 http://www.wsj.com/articles/lattice-to-buy-silicon-image-for... 4. NXP-Freescale: http://www.eetimes.com/document.asp?doc_id=1327236 http://www.eetimes.com/document.asp?doc_id=1327236 5. (2014) Cirrus-Wolfson: http://www.eetimes.com/document.asp?doc_id=1322171 http://www.eetimes.com/document.asp?doc_id=1322171 6. Avago is further looking at Xilinx, Maxim, and Renesas: http://www.reuters.com/article/2015/05/14/us-chipmakers-m-a-avago-idUSKBN0NZ27520150514 http://www.reuters.com/article/2015/05/14/us-chipmakers-m-a-... This is one industry that is in flux ATM. Edit: Further afield, though tightly coupled with this industry, on the manufacturing equipment side, Lam Research announced acquisition of KLA-Tencor today http://www.wsj.com/articles/semiconductor-firm-lam-research-to-buy-kla-tencor-1445419669 http://www.wsj.com/articles/semiconductor-firm-lam-research-...
- normaldotcom 11y ago
  Another consolidation this year: Dialog is buying Atmel, although Atmel is fairly small compared to the other big players in the microcontroller market.
mathgeek 11y ago
For those wondering where all the other hard drive companies went: https://upload.wikimedia.org/wikipedia/commons/thumb/8/87/Diagram_of_Hard_Disk_Drive_Manufacturer_Consolidation.svg/2000px-Diagram_of_Hard_Disk_Drive_Manufacturer_Consolidation.svg.png https://upload.wikimedia.org/wikipedia/commons/thumb/8/87/Di...
koberstein 11y ago
Now if they could just fix the broken firmware they released for my WD Live TV player.

167 points by jsnathan 11y ago

These companies both sound like bad western tech crossover movies from the 80's. This was bound to happen.

This sucks for consumers. Prices are already way to high for HDs and don't seem to come down anymore. It is as if there is some sort of price fixing going on.

digitalzombie 11y ago
Yeah seriously, SanDisk own patents to flash IIRC, their stuff is always less than their competitors. I hope WD isn't going to jack up prices.
- dogma1138 11y ago
  SandDisk SSD's aren't cheaper, not when you are comparing oranges to oranges, they sell allot of very very low end SSD's their performance series costs more than comparable drives from Samsung. There are other companies that also sell cheap SSD's like Micron and Crucial but the big names Samsung, Intel, OCZ(Toshiba) usually sell quite high end devices. Samsung pretty much blew the market out of the water with their Evo series it comes very close to the performance of it's Pro series and other high end SSD's out there where it comes to real world use at a fraction of the cost. It brought the costs of SSD's down to less than 350$ per TB while keeping outstanding performance and life span.
- dragontamer 11y ago
  Micron seems to be the cheapest in my experience, aside from TLC crap from Samsung.
- whoopdedo 11y ago
  I don't think WD has any motivation to increase prices. The point isn't to stop SanDisk from competing with them. They need a SSD product and acquisition is easier for them than developing their own. What I wonder is if WD will continue the green and blue lines. The writing is on the wall for spinning disks. They may reduce the number of HDD models they sell and make SSDs the new green.
- Sophistifunk 11y ago
  They probably won't. SanDisk already make the most expensive flash drives, as well as cheaper consumer models. But I have a couple of their top shelf drives, like the "Extreme Pro" USB3 stick. They're stupid fast, and worth every penny, assuming it has a long life.
hga 11y ago
Hmmm, when did the price decreases stop? I last bought some high capacity drives in 2011 just before the floods in Thailand zapped the industry, and I now note I can buy twice the capacity, 2TB -> 4TB, for $35 less. There could be demand issues, as companies like Amazon, Google, Backblaze, etc. etc. buy them in mass quantities to offer redundant cloud storage. At the other end, SSDs have got to be eating the lunch of small-moderate capacity SAS enterprise drives, and if not now, soon enough the basic sub 1 TB drives that workstations and laptops come with. I'm very conservative with these sorts of things so I avoided jumping on the SSD bandwagon, but a recent failure of one of my Seagate 15K system disks prompted me to buy one of Intel's lowest end, lowest capacity datacenter SSDs (DC S3510 80GB) and I don't think I'm going to be looking back....
- anoother 11y ago
  Really? Before the flood, I seem to remember you could get a 1TB Samsung F1 7200rpm drive for £30. Now, an equivalent drive will set you back around £35, and it's taken a long time to reach that level...
  - toyg 11y ago
    Physical disks are not going down in price because their market volume is shrinking, their technology is just not evolving. On consumer machines, the 5400rpm drives are being replaced by other 5400 or by SSDs, not by 7200rpm. So the 5400 disks don't go down in price, whereas SSDs do (albeit slowly, due to technological constraints).
    - cdr 11y ago
      I'd say SSDs are going down in price pretty dang fast. The technology is advancing far more rapidly than HDDs could ever dream of. The Samsung 850 EVO 500GB is already ~25% cheaper than the equivalent 840 was a year ago, with better performance. Not to mention the high performance NVMe drives we're starting to see, where the price:performance is even better.
      - 11y ago
rincebrain 11y ago
I just bought a number of 5 TB HDDs on sale for $140, and Samsung has been driving the prices of SSDs down every iteration. I agree it was stagnant for a while, but it's not really static now.
Eric_WVGG 11y ago
well if you’d like to look at the bright side, one less decision you have to make
adventured 11y ago
You can buy a Seagate 5tb external for $136 on Amazon. I was paying that much for 1tb to 1.5tb just a few years ago. That's a significant improvement. Prices have fallen by half for 1tb (~$50); and at the $125-$135 price point, capacity has increased by ~200%. I fail to see how prices are way too high. Current prices are a steal in my opinion.
bryanlarsen 11y ago
Prices of hard drives historically haven't come down. For a very long time consumer hard drives have been between $50 to $200. What changed over time was the size of the drive you could get for $X. That's still happening, but it's happening a lot slower than it used to be.
- JoeAltmaier 11y ago
  That's an important point. Drives the same size as those 5 years ago go down in price, but at some diminishing rate as they asymptotically approach zero $. With storage its hard to say exactly what its doing, because it won't hold still to be measured. You have to allow multiple variables to change in any stats collected over time (capacity, physical size, speed, volatility). It seems reasonable to chart the price of some standard capacity (most common?) over time. Is that changing any more?
Igglyboo 11y ago
I don't think I've seen them ever come down within the past 10 years, all that happens is that storage space goes up and smaller drives stop being produced.

trymas 11y ago

I always have thought that companies were bought for a price of it's market value (stock price * number of stocks), or if someone did not wanted pay all in cash they would've tried to compensate in other ways until market value is reached. But here WD bought SD for ~85-86$ per share, when it was worth ~75$ per share. It's at least 13% more. Does it simply mean that WD hopes that SD will rise in value rapidly? Or I imagined company buying evaluation wrong?

nashashmi 11y ago
They issued $18 bln in new debt. Does that mean they only paid $1 bln for it?
- wjnc 11y ago
  That depends on who issued the debt and what happened after that. If WD issued the debt, they could use that incoming cash to pay the old stockholders to gain the shares in SanDisk. That would be a real cash outflow. Bigger company after the transaction, and bigger debt. Alternative is that WD pays cash to stockholders they might have had lying around. Then issue debt in SanDisk and pay dividend upstream from Sandisk to WD afterwards. Bigger company, and bigger debt result, only different place for the debt. Sometimes tax incentives help which route to choose (private equity often loads up firms on debts, since interest is deductible). Only way to 'pay less' would be (happens sometimes) that you can buy a company that holds a lot of cash, but that has a relatively low valuation one way or the other. Perhaps stockholders sense risks and don't expect dividends (market cap in that sense is expected value of future earnings plus lots of noise). Then you buy company, and use the cash for superdividend right away. Bigger company results, but with relatively stronger solvency since you've paid part from cash that was 'undervalued'.
- deleted 11y ago
  [deleted]
hga 11y ago
When buying a healthy company there's generally a premium required, which is booked as "good will" https://en.wikipedia.org/wiki/Goodwill_(accounting) https://en.wikipedia.org/wiki/Goodwill_(accounting) And all too often written off after the acquisition doesn't pan out.

shas3 11y ago

The consolidation in the semiconductors/chip IP industry, thus far in 2015: 1. Intel-Altera: http://www.bloomberg.com/news/articles/2015-06-01/intel-buys-altera-for-16-7-billion-as-chip-deals-accelerate http://www.bloomberg.com/news/articles/2015-06-01/intel-buys... 2. Avago-Broadcom (and earlier, Avago + LSI): http://www.bloomberg.com/news/articles/2015-05-27/avago-said-near-deal-to-buy-wireless-chipmaker-broadcom http://www.bloomberg.com/news/articles/2015-05-27/avago-said... 3. Silicon Imaging-Lattice: http://www.wsj.com/articles/lattice-to-buy-silicon-image-for-600-million-1422358580 http://www.wsj.com/articles/lattice-to-buy-silicon-image-for... 4. NXP-Freescale: http://www.eetimes.com/document.asp?doc_id=1327236 http://www.eetimes.com/document.asp?doc_id=1327236 5. (2014) Cirrus-Wolfson: http://www.eetimes.com/document.asp?doc_id=1322171 http://www.eetimes.com/document.asp?doc_id=1322171 6. Avago is further looking at Xilinx, Maxim, and Renesas: http://www.reuters.com/article/2015/05/14/us-chipmakers-m-a-avago-idUSKBN0NZ27520150514 http://www.reuters.com/article/2015/05/14/us-chipmakers-m-a-... This is one industry that is in flux ATM. Edit: Further afield, though tightly coupled with this industry, on the manufacturing equipment side, Lam Research announced acquisition of KLA-Tencor today http://www.wsj.com/articles/semiconductor-firm-lam-research-to-buy-kla-tencor-1445419669 http://www.wsj.com/articles/semiconductor-firm-lam-research-...

normaldotcom 11y ago
Another consolidation this year: Dialog is buying Atmel, although Atmel is fairly small compared to the other big players in the microcontroller market.

mathgeek 11y ago

For those wondering where all the other hard drive companies went: https://upload.wikimedia.org/wikipedia/commons/thumb/8/87/Diagram_of_Hard_Disk_Drive_Manufacturer_Consolidation.svg/2000px-Diagram_of_Hard_Disk_Drive_Manufacturer_Consolidation.svg.png https://upload.wikimedia.org/wikipedia/commons/thumb/8/87/Di...

koberstein 11y ago

Now if they could just fix the broken firmware they released for my WD Live TV player.