Wave Systems Corp. (fka WAVXQ)

[Fullmoon]

Needham Sees March or April Rebound in Disk Drives

Posted by Tiernan Ray

http://blogs.barrons.com/techtraderdaily/2009/02/02/needham-sees-march-or-april-rebound-in-disk-drives/

Needham & Co. analyst Richard Kugele today writes that we are “nearing the trough for negative data points in hard disk drive land.” He believes stabilization of demand for drives will become apparent “over the next couple weeks,” leading to trough valuations for the group, whereupon you can start to buy the stocks.

In particular, drive inventory industry-wide is at about 2 to 2.5 weeks, he thinks, below the 4 weeks of inventory Seagate (STX), the largest vendor, indicated when it reported earnings on January 21. That’s the lowest level Kugele has ever heard of, he says, and his sources tell him capacity is running short for every model of drive. Drive price increases from Seagate and Western Digital (WDC). Kugele sees a rebound for the entire hard drive group in March or April. He also thinks Fuji will get out of the business of supplying Seagate and others with the materials incorporated in drives.

Today, Seagate stock is up 15 cents, or 4%, at $3.95, while Western Digital shares are up 84 cents, or 5.7%, at $15.53.