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Western Digital Buys Hitachi’s Hard Drive Wing for $4.3 Billion

Michael Kwan — Tue, 08 Mar 2011 01:07:30 +0000

You know how everybody owns everybody and even though you see different brands, they really are the same company? That kind of idea infiltrates just about every industry and the hard drive business is no exception. The latest deal sees Hitachi Global Storage Technologies snatched up by Western Digital for a cool $4.3 billion.

The deal is worth $3.5 billion in cash and $750 million in WD common stock. The brand and headquarters for Western Digital will emerge out the other end, but Hitachi GST’s president and CEO will take over as the president of Western Digital.

Will this help or hurt innovation? Will this help or hurt competition? Well, we already saw a similar deal six years ago when Seagate picked up Maxtor for $2 billion. With today’s announcement, the WD vs. Seagate battle just stepped up another notch, as if it wasn’t already clear enough that these are the two biggest juggernauts in the HDD game.

Western Digital to Acquire Hitachi Global Storage Technologies

Combination of Hard Drive Companies Will Create Industry’s Broadest Product Portfolio and a Significant Pool of Resources for Innovation

IRVINE, Calif. and SAN JOSE, Calif., March 7, 2011 /PRNewswire-FirstCall/ — Western Digital (NYSE: WDC) and Hitachi, Ltd. (NYSE: HIT / TSE:6501) announced today that they have entered into a definitive agreement whereby WD will acquire Hitachi Global Storage Technologies (Hitachi GST), a wholly-owned subsidiary of Hitachi, Ltd., in a cash and stock transaction valued at approximately $4.3 billion. The proposed combination will result in a customer-focused storage company, with significant operating scale, strong global talent and the industry’s broadest product lineup backed by a rich technology portfolio.

Under the terms of the agreement, WD will acquire Hitachi GST for $3.5 billion in cash and 25 million WD common shares valued at $750 million, based on a WD closing stock price of $30.01 as of March 4, 2011. Hitachi, Ltd. will own approximately ten percent of Western Digital shares outstanding after issuance of the shares and two representatives of Hitachi will be added to the WD board of directors at closing. The transaction has been approved by the board of directors of each company and is expected to close during the third calendar quarter of 2011, subject to customary closing conditions, including regulatory approvals. WD plans to fund the transaction with a combination of existing cash and total debt of approximately $2.5 billion.

WD expects the transaction to be immediately accretive to its earnings per share on a non-GAAP basis, excluding acquisition-related expenses, restructuring charges and amortization of intangibles.

The resulting company will retain the Western Digital name and remain headquartered in Irvine, California. John Coyne will remain chief executive officer of WD, Tim Leyden chief operating officer and Wolfgang Nickl chief financial officer. Steve Milligan, president and chief executive officer of Hitachi GST, will join WD at closing as president, reporting to John Coyne.

“The acquisition of Hitachi GST is a unique opportunity for WD to create further value for our customers, stockholders, employees, suppliers and the communities in which we operate,” said John Coyne, president and chief executive officer of WD. “We believe this step will result in several key benefits-enhanced R&D capabilities, innovation and expansion of a rich product portfolio, comprehensive market coverage and scale that will enhance our cost structure and ability to compete in a dynamic marketplace. The skills and contributions of both workforces were key considerations in assessing this compelling opportunity. We will be relying on the proven integration capabilities of both companies to assure the ongoing satisfaction of our customers and to bring this combination to successful fruition.”

“This brings together two industry leaders with consistent track records of strong execution and industry outperformance,” said Steve Milligan, president and chief executive officer, Hitachi Global Storage Technologies. “Together we can provide customers worldwide with the industry’s most compelling and diverse set of products and services, from innovative personal storage to solid state drives for the enterprise.”

Hiroaki Nakanishi, president, Hitachi, Ltd. said, “As the former CEO of Hitachi GST, I always believed in the potential of Hitachi GST to become a larger and more agile company. This is a strategic combination of two industry leaders, both growing and profitable. It provides an opportunity for the new company to increase customer and shareholder value and expand into new markets. Additionally, it is important to us that WD shares common values with Hitachi GST to create a more global company that is well positioned to define a broader role in the evolving storage industry.”

WD’s exclusive financial adviser on the transaction is Bank of America Merrill Lynch; its lead legal adviser is O’Melveny & Myers LLP. Goldman, Sachs & Co serves as financial adviser to Hitachi, Ltd. and Hitachi GST. Legal advisers to Hitachi, Ltd. and Hitachi GST are Morrison Foerster LLP and Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates, respectively.

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Maxtor Black-Armor; Some Serious Data Protection

Jeff Cutler — Thu, 25 Jun 2009 17:21:11 +0000

If you work with digital content – be they photos, music or even documents – you’re going to need a storage solution.

CDs and DVDs have a limited shelf life and are unwieldy if the data you’re storing is larger than 4GB. That’s where portable hard drives come in.

External drives, at least those that are portable, are typically between 160GB and 500GB (and increasing every day). They are often plug-and-play, so moving your data is as easy as plugging in a USB cord and dragging your data to the drive to back it up. And now they’re even coming in secure, standalone models.

Maxtor’s BlackArmor Always encrypted Government-grade Hard Drive – $169.99 MSRP for 320GB – $119.99 MSRP for 160GB. However these were marked down on Maxtor’s web site the day I wrote this article to $134.99 and $59.99 respectively.

The BlackArmor’s claim to fame is that it has government-grade AES encryption certified by the National Institute of Standards and Technology (NIST). It also comes with the “Maxtor Manager” software suite and the “BlackArmor Manager” software suite. These software suites can be installed and used to automatically back up files, synchronize folders on multiple computers, update passwords, and test the drive.

Any time the drive is disconnected it automatically locks, and without a password, one cannot access any of the backed up files on the drive. But how does it work? Let’s go from box to backup…

In the box are the BlackArmor drive, a USB cable to connect it to your computer, a carrying pouch, and a Quick Start Guide. In less than a minute I had it hooked up to my desktop and the BlackArmor Manager Configure screen auto launched. The first steps are to enter the drive’s 25-character Security ID (SID) that is printed on the back of the drive, and then create a password. Once this is done, you can now click Unlock and unlock the drive. When this is done the autoplay window will open and the guide instructs you to select Install Maxtor Manager from this window. This is just a straight forward install with a EULA screen and then install. Took all of about 90 seconds and then a re-start is needed.

One nice thing I noticed right away about this drive is that it has two soft blue lights on the side. One is a large light that will only light up once the correct password has been entered. The other is a smaller light that comes on as soon as the drive is plugged in to your computer, but will blink and then go out when you use the “Safely Remove Hardware” tool to remove the drive.

My 320GB drive showed a capacity of 298GB. The drive comes loaded with the above mentioned software along with a PDF user’s guide. The guide is quite comprehensive and goes over all the features of the drive and goes very in depth on the functionality of the Maxtor Manager and BlackArmor Manager software. It tells you how to enter different modes, change passwords, change hint questions and answers, and all the different features of the automatic backup software. The manual is 126 pages, but a big reason it is so long is because of the extensive use of screen shots that make it much easier to learn how to use all the features of the software.

One major limitation to this drive is that the software only work on PCs and will not work on a Mac, so the testing done on this drive was performed by my friend Henry DuLaurence. I expect to leverage his PC farm for other devices that aren’t Mac friendly. But back to the test…

Moving files, deleting, copying and saving data was easy. I was able to read and copy the data on my PC and when locked down, the drive protected the files perfectly.

Unplugging/disconnecting the drive puts it back into locked mode, so whenever you’re done using it your files remain safe.

Things I like…

It is USB powered which means no clunky power adaptor to carry around.

The size and the feel of this drive are great. It feels heavy, solid, and well made in your hand. It fits into a pocket or laptop bag easily. The rubbery exterior ensures you won’t fumble it.

The password screen launches quickly when the drive is connected so you can enter your password and get to your files fast. I like the clean black and brushed aluminum design, and that your stuff is completely protected by passwords you choose. I like the ease of changing your password when needed.

Automated backup software included. Makes it easy to plug and play and start backing up in minutes and restore if and when needed.

Things I don’t like…

The BlackArmor drive will not run on a Mac. The BlackArmor will only work on a PC running Windows XP or Vista. It will not work with any other operating systems as an unlocking utility is required that only runs on these operating systems.

Initial setup and configuration is somewhat tedious, but needed in order to set the encryption key. But once it is done, you won’t need to do it again unless you forget your password and need to erase your drive to reset it. This could be a little intimidating for the basic consumer or the user who misplaces his manual.

Cords are way too short, which seems to be the norm for most of the portable drives I see. I understand that portable is important, but portable doesn’t mean minimal.

Only has USB support. All external drives should come with an ESATA port. Considering the amount of data that can be stored, you would think these companies would give you an option to move it quickly if you wanted, and if you haven’t tried an external drive connected with ESATA, which is must faster than FireWire, you would be amazed at how fast it is.

Finally, it gets dirty and smudgy WAY EASILY. The gloss surface holds fingerprints better than the FBI and the black case shows every speck of dust. In some photos you’ll almost be able to see my camera in the reflection. Sure, it looks striking and gorgeous in reflective black, but it gets dusty and dirty quick.

The verdict…

Unless you have a Mac, I think the Maxtor BlackArmor Drive makes the cut. It is priced similarly to other secure drives and the backup software is easy to use and very intuitive. Once it is configured it is easy to use on any PC. And if you shop around you can probably find a 320GB BlackArmor for around $90 which is a pretty good deal for someone who wants to securely transport their data.

Company URL: http://www.maxtor.com

(A good portion of this Cut-List piece was made possible with the help of Henry DuLaurence)

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