Western Digital/Unisplendour JV To Boost Big Data In China

Western Digital Corporation (NASDAQ:WDC) and China based Unisplendour Corp. have reportedly formed a new joint venture worth $300 million. The venture will focus on selling storage devices as well as big data services in China.

This deal will expand Western Digital’s presence in China while leading to technological advancements for Unisplendour.

As per the terms of the deal, Unisplendour will own 51% of the UNIS WDC Storage Co., Ltd. (UNIS WDC) while Western Digital will own the remaining 49%. The company’s R&D wing and headquarters will be located in Nanjing, while its office for handling sales and marketing will be located in Beijing.

Big Data Holds the Key

The main objective of the venture will be to market the storage devices manufactured by Western Digital in China as well as to develop innovative big data storage solutions for a wide range of industries such as media, financial services, meteorology, astronomy, genetic science and telecommunications.

With the passage of time, big data is increasingly gaining traction and enabling social and industrial developments. Additionally, with the development of information technology, the demand for storing big data and applications related to it has also become all the more important. Notably, the Chinese government has taken substantial steps to accelerate progress in certain areas, with data storage being one of them.

As per a report by IDC, the global big data market is worth $32.4 billion which is growing at 27% annually. Moreover, it estimates the data storage business, which is a part of big data to grow by 53% annually.

This is a huge opportunity for Western Digital.

Our Take

We note that, of late, Western Digital has been aggressively pursuing acquisitions. The acquisitions of sTec, Inc., Amplidata, Arkeia Software Solutions, Velobit, Inc. and Virident Systems Inc. have helped the company to boost its business solutions for the small and medium-sized businesses and expanded the company’s SSD portfolio.

Notably, the company’s acquisition of SanDisk in May 2016 to foray into the flash drive storage segment was an interesting move as it opened up the gateway to NAND products.

With this joint venture, Western Digital’s products will get exposure to the 1.3 billion strong Chinese population.

Zacks Rank & Key Picks

At present, Western Digital carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology space are NetApp, Inc. (NASDAQ:NTAP) , sporting a Zacks Rank #1 (Strong Buy) and NCR Corporation (NYSE:NCR) and VASCO Data Security International Inc. (NASDAQ:VDSI) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Interested in IPOs? Check out the special edition of Zacks Friday Finish Line below, where Editor Maddy Johnson and Content Writer Ryan McQueeney interview Kathleen Smith of Renaissance Capital about the IPO market in 2016 (see part two here).

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>