A Financial Analysis of Western Digital Corporation

Moving into the year 2007, many Americans soon realized the impact and new importance videos have become on the Internet. With the craze surrounding WebPages such as youtube, where new videos and ideas can be diffused throughout the Internet, it is apparent that video technology is going to become even more important in 2007. While such may be exemplified as a rudimentary analysis, because of such advancement in entertainment, there will be tremendous need for more storage for desktops, laptops, and even more mobile devices such as MP3 players who incorporate video technology. As a result, there will be remarkable opportunities for data storage devices such as produced by Western Digital Corporation (WDC) which will ultimately benefit its shareholders.As stated by Yahoo! Finance, Western Digital Corporation is responsible for the “development, manufacture, and sale of hard disk drives worldwide.” In addition, its hard disk drives extends not only to computers in the form of both desktops and laptops but to more unconventional devices such as MP3 players, servers, USB drives, gaming systems, and even karaoke systems. With such a wide selection of available markets, during such a time of prosperity and innovation relative to the video playing field, there is a tremendous opportunity for Western Digital to continue and expand upon production to supply the growing demand of moving film entertainment. What is also intriguing about Western Digital’s operating means is its global presence around the world. Because Western Digital is a worldwide corporation, with liquidity spreading throughout the world, there is tremendous opportunity, with growing markets in China and India and a strong economic presence in already developed nations such as found in Europe, for the continued expansion of internet capabilities throughout these markets. Consequently, there will be continued high demand, especially with such prosperity, for margins and profits to increase dramatically relative to Western Digital’s production means. Both the worldwide independent affluence and a depreciating dollar will have strong, but positive, consequences relative to Western Digital’s financial analysis, and regardless of where the American economy descends or ascends to, Western Digital, if more innovation and expansion is played into its operations, will be a successful company because of its fundamentals.Nevertheless, as I mention the potential for strong fundamentals, it is already apparent that Western Digital, relative to its competitors, provides figures which are extraordinary without future implications. With a 19% revenue growth margin (and a 22 dollar revenue per share ratio) in both of the last two years coupled with a 90% margin growth relative to earnings (EBIT) in 2006 after an already strong 30% earnings growth from 2004 to 2005, it is evident that Western Digital is not only producing at strong numbers as indicated by sales but finding new sources of income at the same time with lower costs of revenue as income from continued operations as found in the income statement had increased nearly 350% in the last fiscal year. Continuing, the strong revenue which has grown at dramatic rates for Western Digital has continued to add a stronger case to label this company as a value stock as unfortunately its share price has not done as well as could have hoped. With an enterprise value to revenue level of 0.84 over the last twelve months and a price to sales ratio of 0.99 over the same period, compared to industry competitor’s EMC’s respective numbers of 2.75 and 2.80 or Network Appliance’s even worse 5.65 and 6.14, it is clear, at least relative to revenue numbers, that Western Digital is undervalued in its industry. While arguments may be made that earnings and income should play more of a significant factor, it is evident that by comparing Western Digital’s forward P/E ratio of 9.41 and its 5 year PEG ratio of 0.94 to EMC’s respective 21.96 and 1.69 or Network Appliance’s 28.16 and 1.23 numbers, Western Digital proves to contest any argument illustrating that this company is not undervalued. In addition, Western Digital has a strong asset to liability percentage as illustrated by the current ratio of 1.7 and an enterprise value lower than its market value.While such may not look that appealing when utilizing the adjusted price value model when the DTS is added in for M&A deals, for the common shareholder, it is much better for a company to have the luxury of being able to cover its liabilities with its assets if liquidation was required which cannot be argued the same for its competitors. In addition, as stated with the growing demand of larger storage capacities to hold the new video requirements, it is clear after looking at Western Digital’s EBITDA, a proxy of cash flow, over the past year that it has the capabilities to fund new capital expenditures to accommodate the growing changes illustrated by the technology sector. Thus, after examining the fundamentals and growing numbers as illustrated by Western Digital, compared to its rivals, it is completely evident that Western Digital, for one reason or another, is undervalued making it an excellent choice of purchase.After looking at the fundamentals, one may wonder why Western Digital, with a beta of about 3 has only grown about 5.5% over the past 52 weeks while the S&P has grown nearly 10% during the same time. Others may also wonder why Deutsche Bank recently downgraded the stock from a buy to a hold. Truth be told, with a slowing economy in the United States, many are wondering if the percentage of revenue and sales accrued from America will hamper corporate earnings in the next year. However, after stating how the video explosion will continue to grow on the Internet and how foreign markets are eager to purchase hard disk drives for the growing demand in their respective countries, coupled with the fact that Western Digital has phenomenal fundamentals relative to its peers and its share price, I cannot find a reason to solidify the purpose of not purchasing shares of this stock.While technical analysis is not favored to many Wall Street analysts, the share price of Western Digital has grown over five percent over the past year, over 100% over the past two years, and nearly 300% over the past five years. It’s true that 2006 has not been favorable to Western Digital as it has to other industry leaders and companies, but such should only solidify the argument that Western Digital is cheap compared to all other corporations. With most other industries peaking at their 52 week highs, ready for a negative correction if the economy falters, Western Digital, relative to its earnings, still has not met such status, but has the required fundamentals to due so. Looking more closely at the simple moving average (SMA) of 100 days of a one year chart, it seems that over the past few months, Western Digital has hit a support level of about 17 and is on a small upward climb on relatively high volume. Such should be a good indicator of how this company will perform, with all the other positive factors associated, in 2007.Thus, after examining what this company does and its global presence, its fundamentals, and its technical upside, all the factors lead me to believe that this company is incredibly undervalued to both its industry and the rest of the market. It’s true that 2006 was not the greatest year for this company, despite having positive returns of equity over 52 weeks, but 2007, with the continued growing demand of its products around the world, will lead the argument of having Western Digital, because of its cheap price, producing numbers that will not only amaze its shareholders but bump this company to possible historical highs.

Monetary Relations Between the Western Balkan Six Countries

Local collaboration between the western Balkan nations is the key factor that will lead those nations towards the EU point of view. Enhancing relations of the Western Balkan nations is an objective that ought to be satisfied. The change of these relations is a dedication made by the nations themselves at the EU-Western Balkans Summit of Zagreb (2000) and Thessaloniki (2003). Provincial collaboration is the path towards territorial monetary success, social and financial strength.It is extremely evident these days that the obligations and advantages of the western Balkan nations are attached to the improvement and respective participation. Participation is an issue connected in various fields, the ones of cross-fringe nature, to political comprehension, tending to a social and financial success.Territorial collaboration is a vital key approach of building positive relations. The Western Balkan nations ought to be opened to team up towards a supportable economy, provincial coordinated effort and association as variables of crucial key significance of building positive relations among them.I will do the investigation of the effect of such coordinated effort in the financial participation, accomplishing monetary solidness and distinguishing the particular upper hands, reinforcing territorial market reconciliation and common disposal of non-levy exchange obstructions. In particular, in this paper I will concentrate on two-sided monetary relations amongst Albania and Serbia in the edge of mix process.Presentation”We note progressively more grounded help among the nations of the locale for the advancement of provincial ties. It is extremely promising that the zones of exchange, vitality and transport are among those where local collaboration is the most significant. Financial advancement is significant if the locale is to create the employments required for its kin. Advance endeavors are expected to expand trust and participation amongst people groups and nations. In the range of equity and home undertakings, the nations need to improve local collaboration to accomplish comes about.Expanded local participation in south-eastern Europe is basic, paying little mind to the diverse phase of joining of the different nations, and an essential standard for the European course of the western Balkan nations. The steadiness, thriving and security of the district are of noteworthy enthusiasm to the EU. The EU will keep on fostering all undertakings to advance provincial participation.”Maybe the most unmistakable accomplishment of all lies in the way that a large portion of the Western Balkan nations are on a way towards European Union promotion, something that appeared to be far away in the 1990s. It is officeholder upon us not to downplay the genuine difficulties that lie ahead, both as far as macroeconomic dependability and much more so as to longer-term improvement. A key commitment of this book is to underscore the fragmented change process in the area. We ought to be stressed over this, as without additionally changes the dull development of late years could turn into the standard, endangering the meeting of expectations for everyday comforts towards Advanced European levels, and denying business chances to numerous in the district.Examination OF THE ECONOMIC RELATIONS BETWEEN THE WESTERN BALKAN COUNTRIESAs per David Lipton, IMF first representative overseeing Director, he progress from communism to private enterprise and majority rule government was less smooth than in different parts of Emerging Europe. However, once the war finished and peace restored, these nations accomplished more than remake: they started a change into showcase economies, changing costs, privatizing many state-and socially-possessed ventures, and building the foundations expected to help a market economy.On his report investigations the fundamental financial improvements and accomplishments in the Western Balkan nations, and lays out the key macroeconomic approach challenges for what’s to come. While the crumple of socialism 25 years prior denoted the begin of the progress to advertise economies for all Emerging Europe, the monetary change of the Western Balkans truly moved simply after the contentions that immersed the locale in the 1990s died down. Henceforth, the previous 15 years are the fundamental concentration of this report. The report is organized as takes after. The outline part overviews the key discoveries and strategy suggestions. Individual investigative parts at that point concentrate top to bottom on the accompanying key topical issues: development and auxiliary changes, macroeconomic improvements and arrangements and the part of the IMF in the monetary change, and the money related division. Each expository section finishes up by laying out the key difficulties that the Western Balkans confront and proposes conceivable approach reactions. Given that the Western Balkan nations are following the way beforehand taken by New Member States to end up individuals from the European Union, the investigation depends vigorously on correlations between these two subregions. In packing the experience of more than 17 nations more than 15 extremely significant years, the report unavoidably concentrates on wide topics, and can’t do equity to the subtlety and assorted variety of individual nation stories. While the report features the part of the IMF amid the financial change, the Fund is just a single of various offices that have upheld these nations in the course of recent years. Specifically, the IMF may have played a lead part in the early periods of progress, however for some Western Balkan nations the possibility of promotion to the European Union has additionally been an imperative impetus for change. Other key players incorporate the European Bank for Reconstruction and Development, European Central Bank, European Investment Bank, and World Bank, and in addition respective nation givers and private and deliberate division establishments. In any case, regardless of whether outside help originates from the IMF or others, its effect pales in noteworthiness to the significance of locally determined change and advancement, which is the important subject of the report. The report was set up by a group from IMF base camp in Washington DC, IMF workplaces in the district, and the IMF’s Joint Vienna Institute (JVI). The perspectives exhibited are those of the creators.Territorial COOPERATIONTerritorial collaboration is a rule of the most elevated significance for the political strength, the security and financial improvement of the western Balkan nations: Albania, Bosnia and Herzegovina, Croatia, the previous Yugoslav Republic of Macedonia, and Serbia and Montenegro (counting Kosovo, under the support of the United Nations, according to UN Security Council Resolution 1244 of 10 June 1999). Huge numbers of the difficulties confronting the western Balkan nations are basic to them as well as have a cross-outskirt measurement, which includes their territorial neighbors.Since the broadening of 1 May 2004, the EU and the western Balkans have turned out to be considerably nearer neighbors, thus the circumstance in the western Balkan nations, their advance headed for European reconciliation and their present and future relations with the EU truly are of prompt worry to the EU itself. Whenever Bulgaria and Romania progress toward becoming EU individuals, the whole western Balkan area will be encompassed by Member States of the European Union. This will have critical repercussions for both the nations of the locale and the EU in various zones, specifically where the free dissemination of merchandise, administrations and people are concerned. These difficulties must be tended to in the more extensive setting of south-eastern Europe.The diverse arrangement of reasons – political, monetary and security – for which provincial collaboration in the western Balkans is critical, are nearly interlinked: for example, local solidness and security are required for financial improvement, which thusly supports strength and security in the area.Since the Stability Pact was established, the heads of state and legislature of the south-eastern European nations have met frequently for conference. At the Bucharest Summit in February 2000, they received a ‘Sanction on Good Neighborliness, Stability, Security and Co-operation in South-eastern Europe.’ A scope of co-agent connections has supplanted reciprocality. Most Stability Pact undertakings and exercises were proposed and are done by at least two nations of the district.Already every nation of south-eastern Europe had a major sibling outside, and a large portion of the nations of Europe had a favored accomplice in the Balkans. That was the purpose behind many clashes, infrequently even intermediary wars, or a motivation behind why clashes in the Balkans progressed toward becoming wars in Europe. The Stability Pact is the political response to this obsolete political approach from the nineteenth century. The Pact has made an upward winding of common trust and handy advances. However, the two sides are as yet doubtful, watching to see that the opposite side conveys, gives signs of certainty building and that the conditions are reasonable. Appears that the locale is going to pick a positive and effective way: step by step, the Pact is building the new, more extensive Europe.For what reason did the Western Balkans join all the more gradually? One conceivable clarification is that the nearer physical separation of the New Member States to cutting edge EU economies may have offered focal points as far as access to business sectors and speculations, and encouraged the exchange of information. These relative focal points are just as of late in part balance by changes in foundation interfaces between the Western Balkans and Advanced EU economies. However even subsequent to controlling for the physical separation, econometric proof proposes that, with the exception of the after war recuperation period, the pace of merging in the Western Balkans has been slower than in the New Member States. This is incompletely because of the nonappearance of meeting inside the Western Balkan area, in light of the fact that poorer nations, for example, Albania and Bosnia and Herzegovina neglected to become essentially speedier than the wealthier nations.