WDC: my short research

August 23, 2020

Introduction

I purchased 100 shares of WDC on earning day with over 10% losses, but it went down 9.84%. I like to see if I should purchase more shares of WDC. My strategy is to buy weakness and turn into strengths. 

My study

Yahoo -> finance -> conversation:

 $NVDA

Profit Margin 28.18%
Operating Margin (ttm) 29.41%
Quarterly Revenue Growth (yoy) 38.70%
Quarterly Earnings Growth (yoy) 132.70%

$WDC
Profit Margin -1.49%
Operating Margin (ttm) 2.21%
Quarterly Revenue Growth (yoy) 18.00%
Quarterly Earnings Growth (yoy) N/A

They want to preserve liquidity in uncertain times and also pay down the debt faster. Regrettably, they announced all that by conveying the general fact that attention to shareholders is diminished (no divy, no buybacks). This is one of the reasons that this has been declining.

Look at an interesting comparison between two CEOs. One who cares about his shareholders and one who does not: RCL vs. WDC. RCL is in deep debt (twice its equity) and is not doing any business in the foreseeable future. It had a loss much higher than expected. However, during the earnings call he came out and cheered everyone by saying that the bookings for next year are higher. Result: the stock skyrocketed. WDC CEO: they beat expectations, he gave a #$%$ report and went around the channels saying how they have to execute better and how there is significant softness. Result: the stock is down 27% and counting. Who would you want to run your business?

WDC is a solid tech play. Just doesn't know how to communicate with Wall St. Nearly every tech company has lowered guidance. But they communicated well and their stock is up.
This obviously is a big problem, but if you have a long term horizon (i.e., retirement account), good time to add. World needs more and more memory, thanks to Youtube, FB, IG and now Tik Tok. WDC is here to stay.

I want to buy but I can't justify it when they don't do anything better than anyone else. Their HDD sales are crushed by Seagate and the SDD market is pretty unsure. On the other hand, this downturn
is a good opportunity for them to shift their strategy or innovate.