FBR Capital’s Craig Berger today offers an update on the situation of the hard-disk drive industry and its impact on PC chip suppliers.
Berger, who is a chip analyst, is primarily concerned with semi stocks such as LSI (LSI), the focus of his report today, on which he maintains an Outperform rating and an $8 price target. LSI makes read channel, controller, serial host interface and other drive-related components.
Since Thailand was hit with heavy flooding back in July, and estimates were cut across the board for drive shipments and PC shipments this fall, it turns out, writes Berger, that “recent checks suggest that disk drive capacity is returning more quickly than the industry previously expected.”
Nidec, a major manufacturer of motor controllers and base plates, confirmed most facilities are now back on line. Western Digital (WDC) resumed production in its Bang Pa-in facility and announced its slider (biggest HDD production gate) facility will be on line in 1Q12.
Specifically, Berger forecasts the industry will produce 135 million drives in the first quarter, up from a prior estimate of 125 million. That will rise to 162 million units in Q2. Mind you, those levels are 18% and 4% below actual demand, respectively, he estimates.
For LSI, the company could turn in $500 million to $550 million in revenue In Q1, better than the consensus $506 million, he estimates.
LSI shares today are down 3 cents, or half a point, at $5.88. Western shares are off 72 cents, or 2%, at $31.42. Shares of drive maker Seagate (STX) are down 32 cents, or 2%, at $15.84.
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