Seagate Technology Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Seagate Technology (Nasdaq: STX  ) dropped over 12% in intraday trading after reports that a key investor may drop out of a plan to take the company private.

So What: Unnamed sources reported that KKR & Co. is considering pulling out of the talks, which reportedly include TPG Capital and Bain Capital LLC. Although KKR's withdrawal wouldn't necessarily scuttle the deal itself, an analyst downgrade also reported today put further downward pressure on the stock.

Now What: A number of analysts are bearish on the world's largest disk drive maker, and Stifel Nicholas analyst Aaron Rakers today reduced his rating to a hold from a buy on the grounds of ongoing risks associated with the negotiations. Given the uncertainties here, I'd take a pass.

Interested in more info on Seagate? Add it to your watchlist here by clicking here.

Fool editor Julie Clarenbach doesn't own any shares of Seagate. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 28, 2010, at 4:57 PM, TheGrabber wrote:

    All that may be true, but as you note in the article they are still..."the world's largest disk drive maker".

    I've profitably traded this stock for over 4 years. Most recently two very profitable sales a few weeks back when this LBO talk first started. I netted 27% and 40% LIFO on each.

    I took advantage of today's 'overreaction' by adding 30% to my position.

    Pretty easy money

    We Buy from the Scared

    And Sell to the Greedy

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