Western Digital to Spin Off NAND & SSD, Valued $10B-$22B

According to Matt Bryson, an analyst at Wedbush Securities, Western Digital is planning to spin off its NAND and SSD business, potentially leading to a valuation between $10 billion and $22 billion. This strategic move will separate Western Digital into two distinct entities: one focusing on hard disk drives (HDD) and the other on NAND flash memory and solid-state drives (SSD).

David Goeckeler, the current CEO of Western Digital, will take charge of the newly formed NAND and SSD division, while Irving Tan, the Executive Vice President of Global Operations, will lead the HDD division.

Bryson’s analysis suggests that as a standalone entity, Western Digital’s NAND and SSD segment could be valued between $10 billion and $22 billion. This is notably lower than the $19 billion Western Digital paid to acquire SanDisk nearly a decade ago. He pointed out that the market has significantly undervalued Western Digital's NAND business, with the HDD segment currently representing nearly the entire company’s market value, which stands at just over $20 billion.

By comparing Western Digital’s annual revenue and market value with Seagate, which primarily operates in the HDD market, Bryson highlighted a significant disparity. Seagate, with $6.6 billion in revenue last fiscal year, holds a market value of $21.4 billion. Meanwhile, Western Digital, despite generating twice the revenue at $13 billion, has a market value of $21.9 billion—almost identical to Seagate’s. This comparison underscores the market's lack of recognition for Western Digital's NAND business.

Bryson estimated the value of Western Digital’s HDD business to be between $19 billion and $24 billion, based on a multiple of 8 to 10 times its net income. In contrast, the NAND/SSD business could be valued between $10 billion and $22 billion, depending on gross margin estimates and income multiples.

He concluded that after the spinoff, the combined value of SanDisk and Western Digital as independent entities should reach at least $30 billion, with potential to exceed $40 billion if market conditions are favorable. Bryson also noted that both the NAND and HDD markets are entering a prolonged growth phase, with the full benefits expected to be realized by 2025.

Bryson further noted that SanDisk's market value, prior to Western Digital's acquisition offer, was approximately $10 billion—similar to what SK Hynix paid for Solidigm.