More Power to Seagate

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December 21, 2005 | SIN Picks | | Author Asif

The top performer in the SINLetter Model Portfolio, Seagate Technology (STX) which is currently showing gains of 39.61%, decided to acquire Maxtor (MXO) today for $1.9 Billion in stock. Apart from the happy Maxtor stockholders, this also bodes well for Seagate and the entire hard drive sector as it will help reduce the extreme competition that is traditionally seen in the hard drive industry and should help improve margins. Seagate seems to have gotten a great deal as it acquired Maxtor for about 50% of 2004 revenue.

This made me wonder if Western Digital (WDC) also benefited from this news and I noticed that investors had bid up Western Digital shares by 18.57%. While I expected WDC stock to do well, this level was exuberance was surprising. Check out the November 2005 SINLetter for additional information about these three companies and the hard drive sector in general.

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