back to article Elliott Management to WDC board: Spin out or sell flash biz

Activist investor Elliott Management is pushing for Western Digital Corporation's board to break the business in two by splitting the hard disk drive and NAND flash divisions into separately traded entities. In an open letter to the board [PDF], Elliott – which has over time invested roughly $1 billion in WDC, representing …

  1. Doctor Syntax Silver badge

    So which half do they think should make hybrid drives?

    1. Nate Amsden Silver badge

      certainly the disk drive half. Flash can be sourced from many places. Wasn't aware hybrid drives were still around, I used the early Seagate 2.5" hybrids for several years. Doing a search for hybrid on Western Digital's store indicates they have no hybrid flash/hard disks for sale. Not sure if they ever had one. They do have hybrid storage systems for sale.

      Meanwhile(after checking), seems Seagate sells a Firecuda drive that is hybrid, though I don't see mention on the data sheet how much flash the drives have(at least for 2.5", for 3.5" apparently they have 8GB of flash)

  2. Nate Amsden Silver badge

    no growth in flash (for WD anyway)?

    Article states WD bought Sandisk 6 years ago for $19 billion and then states the flash business now is believed to be worth $17-20 billion(assuming that is what "enterprise value" means?). Article says the transaction was transformative but the investor action seems to want to just cancel it and get their money back (in a sense assuming they get ~$19 billion if it's sold off?).

    I don't have an opinion if it is a good idea or a bad idea either way(don't care), though I believe I specifically recall Chris Mellor here on El reg saying something along the lines of Seagate being doomed because they didn't do something similar as WD(and I think he said so many times), now here we are years later and there's a possibility that WD undoes all that.

    Just seems like an interesting situation. What's most surprising to me I guess is the valuation of the WD Flash unit apparently having gone nowhere in 6 years(despite the massive increase in flash usage during that time). Maybe WD paid a super huge premium at the time I don't know.

    1. Persona Silver badge

      Re: no growth in flash (for WD anyway)?

      the investor action seems to want to just cancel it and get their money back

      I'm reading it as Elliott wants to split them in two and take a bigger share in the flash side. That way they can get out of the HDD market before it slowly winds down coupled with the flash business picking up.

      1. Nate Amsden Silver badge

        Re: no growth in flash (for WD anyway)?

        yeah but the end result for WD is they don't have flash anymore and they get the same money back they spent to get into flash in the first place?

  3. Doctor Syntax Silver badge

    One of the remarkable things is that Elliot and their ilk seem to be able to offer what I assume they will insist are informed opinions on so many varied industries. If they're so smart one has to wonder why they don't generate their own product ideas and build up businesses to exploit them. Surely it couldnt be that breaking things is easier and requires less knowledge than building them?

    1. Steve Davies 3 Silver badge

      Why?

      because that would require real work rather than speculating with other people's money.

      Companies like Elliot Management are the worst sort of leeches in existence. They invest in a company and want to double or triple their return in 12 or 18 months. They are willing to destroy a company to get it.

      I'd love for them to try it on with a really big company who would have the resources to fight back dirty.

  4. Ken Hagan Gold badge

    Confused

    If splitting the business would allow both parts to grow, what exactly can the two parts do when split that they can't do now?

    Or is this just "analyst bollocks"?

    1. Doctor Syntax Silver badge

      Re: Confused

      "what exactly can the two parts do when split that they can't do now?"

      Ether:

      Have a sum of share prices for the two parts a bit bigger than Elliot paid for their shares or

      At least one of the halves can be bought up with a leveraged buy-out leaving Elliot with more money and somebody else with debt.

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