The business calculus is a bit strange here. WD and Hitachi are in the part of the storage market that has to be pretty close to it's peak. The HDD business seems to have grown in 2010 http://www.eetimes.com/electronics-news/4213390/Western-Digi... but it's pretty doubtful that the trend will continue, and it seems like there's a pretty sharp cliff coming.
That in mind, why pay $4.3B for a company that only has 2-5 years left in a dying, $0.6B industry that has low profit margins?
Calendar 2010 was a year of tremendous opportunity for the hard drive industry with 651 million drives shipped. That's 330 million terabytes of storage capacity sold into a broadening set of applications and markets. At 16%, this was the industry's strongest full year unit growth in five years. Rotating magnetic storage remains the dominant technology solution for high-volume mass storage of digital content in both the consumer and commercial markets. Full year revenue for the industry expanded by some 13% to $34 billion.
This isn't just about hard drives. Hitachi Storage also makes some pretty huge -- and well-regarded -- SANs, and enterprise storage is one area into which I've never really seen WD make much headway. This acquisition would make them a full-spectrum player in the storage market.
Enterprise storage is also an area with rather higher profit margins than merely hawking spinning rust.
That in mind, why pay $4.3B for a company that only has 2-5 years left in a dying, $0.6B industry that has low profit margins?