Why Western Digital Corp. Shares Soared in January

By Anders Bylund Markets Fool.com

What happened

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Shares of Western Digital(NASDAQ: WDC) rose 17.3% in January of 2017, according to data from S&P Global Market Intelligence.

So what

The digital storage specialist quietly gained about 7% in the first three weeks of January on reports that Western Digital might buy Toshiba's (NASDAQOTH: TOSBF) semiconductor business. Then, sector rival Seagate Technology (NASDAQ: STX) reported stellar earnings, taking Western Digital along for a 7% overnight gain. Western Digital's own results, published the next day, also exceeded analyst expectations, but the good news had already been priced in due to Seagate's strong market signals.

Image source: Western Digital.

Now what

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In January's second-quarter report, Western Digital saw strong demand for large-capacity hard drives and all of its solid state drives (SSDs) based on flash memory chips. Western Digital increased its presence in both of these markets via strategic acquisitions of Hitachi's enterprise storage division and SSD specialist SanDisk. I'd be surprised to see any further buyout plays in the next few quarters, as the current product portfolio seems perfectly tailored for the current and near market trends. As for the rumored Toshiba deal, the two companies have been partnering for years. The Japanese technology giant is in dire need of cash, and could ask Western Digital to take a larger ownership stake in their joint ventures, but private equity firms would be the more logical spinoff target there.

Long story short, Western Digital is unlikely to rock the boat very hard at the moment -- the current business plan is already A-OK.

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Anders Bylund owns shares of Western Digital. The Motley Fool also owns shares of Western Digital. The Motley Fool has a disclosure policy.