Author Archives: Scalper1

Confidence In Western Digital Approval Of SanDisk Acquisition Grows

Expectations that Western Digital ( WDC ) shareholders will agree to the acquisition of SanDisk ( SNDK ) increased Thursday, with Summit Research issuing an upbeat report. “We think that shareholder approval is most likely a done deal,” wrote Summit Research analyst Srini Sundararajan. The vote among Western Digital shareholders is set for March 15. A definitive agreement between the two companies was reached on Oct. 21. The Summit report follows another from RBC analyst Amit Daryanani, who said an analysis of the top 20 Western Digital shareholders and discussions with a large number of investors indicate “the probability is higher the deal gets approved vs. not.” He said 15 of the top 20 Western Digital shareholders also own SanDisk stock, making the potential approval likely. Western Digital and SanDisk combined had revenue of about $20 billion in 2015. Western Digital is largest provider of disk drives, ahead of Seagate Technology ( STX, ), though the market has struggled as PC sales decline. SanDisk is a leading provider of flash-memory chips used in smartphones, tablets, hybrid disk drives and other devices. Western Digital says the combination with SanDisk will continue to transform it into a storage solutions company with extensive product and technology assets and deep expertise in chip-based storage. The deal currently consists of Western Digital paying $67.50 a share in cash plus 0.2387 shares of Western Digital stock, making it worth about $16 billion. The deal was valued at $86.50 a share, or about $19 billion, when it was first announced on Oct. 21. That changed when China’s Unisplendour pulled its plan to make a $3.8 billion investment for a 15% stake in Western Digital on Feb. 23, amid a U.S. government inquiry. By terminating the investment, Unisplendour triggered the alternative deal. According to Sundararajan, the deal is now worth $78.82 a share, based on the current price of Western Digital shares. Western Digital stock was flat, near 47, in afternoon trading in the stock market today . SanDisk stock was near 76, up a fraction. Western Digital anticipates seeing $500 million in total cost synergies, not including tax savings, from the acquisition. Institutional Shareholder Services, a leading independent proxy advisory firm, issued a report on Feb. 29 recommending that Western Digital shareholders approve the deal. ISS said the deal could attain $1.1 billion in cost synergies within 12 months of closing. China regulators, which have a say in the transaction based on Western Digital investments in China, have yet to issue a ruling. Sundararajan expects China to approve.

‘Bedrock’ Utility Market To Double U.S. Solar Installations In 2016

U.S. solar installations will more than double in 2016, driven by the “bedrock” utility market that could account for three-quarters of all new capacity, according to a recent trade study. Solar installers — like First Solar ( FSLR ), SunPower ( SPWR ), SolarCity ( SCTY ) and Sunrun ( RUN ) — will add 16 gigawatts in 2016, bringing cumulative installations up to 41.6 GW and growing by a record 120% year over year, GTM Research forecasts. Cumulative installations already have increased 1,180% since 2010, when the U.S. had 2 GW in total capacity. In 2015, installers added 7.26 GW, up 16%, driven by 66% growth in the residential market. Capacity touched 25.6 GW. Between 2016 and 2020, GTM sees the U.S. solar market adding 24 GW, reaching 97 cumulative installations by 2020. In 2018, GTM expects all segments to grow on a year-over-year basis, and by 2021, more than half of all states will be markets with annual installation above 100 megawatts. Cumulative installations are expected to top 100 GW. ITC Extension Pushes Solar The push was likely driven by the extension of the Investment Tax Credit on solar which, until late December, was poised to expire for residential installations at the end of 2016. Utilities would have seen the subsidy step down from 30% to 10%. GTM credited North Carolina developers for a Q4 boom in the solar market. In 2015, North Carolina became the second state outside California to add more than 1 GW of utility photovoltaic (PV) installations on an annual basis. In 2015, the utility market accounted for 57% of installed capacity. But installation growth lagged the residential market, up 6% year over year to 4 GW. The residential market added 2.1 GW, up 66% vs. 2014. The residential market has grown at 50%-plus rates for four consecutive years. The non-residential market was flat for the third consecutive year in 2015. But in 2016, the utility market will grow by triple digits, GTM predicts. “Looking ahead to the rest of 2016, we anticipate another banner year for U.S. solar, which will benefit from gigawatts of utility (photovoltaic) that rushed through the early stages of development to ensure interconnection in 2016,” GTM wrote in the report. Utility To Outgrow Residential Utility solar is becoming more economical, with costs now ranging between $35 per megawatt-hour to $60/MWh. Regions in Texas and the Southwest are retiring aging coal fleets and replacing them with utility solar and natural gas, GTM wrote. In 2015, Arizona, California, Massachusetts, Nevada, New Jersey and North Carolina all surpassed 1 GW in cumulative solar capacity. But new net-metering regulations that Nevada’s Public Utilities Commission voted in late last year will force that state from its position as the No. 1 PV market to No. 31 in 2016. IBD’s Energy-Solar industry group, led by First Solar and SunPower, hit a nearly three-year low last month. It ranks No. 50 our of 197 groups tracked. Nevada might not be alone, GTM wrote. Although California passed net-metering 2.0, which the solar market has embraced, other states could go the Nevada route. This year, Nevada upheld net-metering reform that doesn’t grandfather existing solar customers under the old rate scheme. Net metering refers to the system that lets rooftop solar customers get credits for any excess energy they send back to the grid, but those credits are now far less generous in Nevada. “While a growing number of state markets are picking up steam, an even larger number of states are considering reforms to net-metering rules that threaten the market’s ability to maintain a hockey-stick growth trajectory,” GTM wrote. Meanwhile, component pricing for residential is expected to stagnate, while utility sees a continued plunge. Overall system pricing fell by 17% in 2015. Residential hardware costs fell 16% in Q4, but soft costs (including customer acquisition costs) jumped by 7%. The non-residential market saw 15% and 6% declines in hardware and soft costs, respectively. Utility soft costs declined by 37% and 23% in fixed-tilt and tracking projects, respectively, said GTM.