Western Digital and Sandisk began trading as separate entities on February 24th, a move seemingly validated by their initial stock performance. Western Digital's shares dipped by 2.9%, while Sandisk's fell by 7%, resulting in market capitalization shifts that supported the separation.
Prior to the split, Western Digital, including Sandisk, had a market cap of $17.94 billion. Post-separation, Western Digital's market cap stood at $16.95 billion, and Sandisk's at $5.6 billion, totaling $22.55 billion.
This $4.61 billion increase in combined value vindicates activist investor Elliott Management's long-standing push for the separation of the HDD and SSD businesses to unlock greater shareholder value.
Sandisk's recent financial disclosures revealed a revenue decline and negative free cash flow in recent fiscal years. CEO David Goeckeler projects positive free cash flow at a $10 billion annual revenue level, potentially achievable within three years.
Interestingly, Sandisk's joint venture partner, Kioxia, forecasts significantly higher revenue for the current fiscal year, raising questions about Sandisk's monetization of their shared NAND output and the future direction of Elliott Management's investment in the newly independent Sandisk.
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