Acting on panic never helps investors, but it's still a good idea to question why you're really buying individual investments.

Consider digital storage firm Western Digital (NYSE: WDC). Though demand for memory storage continues to be strong, you'll find that a few of the 1,220 Motley Fool CAPS members weighing in on the company offer reasons to be bearish.

Here at the Motley Fool, we like to consider both the good and bad sides of an investment, so in this article, so I'm highlighting three of the main bearish arguments on Western Digital today. Be sure to read the bullish side as well, and then weigh in with your own comments below or rate Western Digital in CAPS.

1. Not meeting expectations
Unlike the expectations-beating quarterly earnings and guidance that competing memory and storage maker SMART Modular Technologies (Nasdaq: SMOD) recently turned in, Western Digital disappointed Wall Street in its fiscal fourth-quarter results and first-quarter guidance. Several analysts slashed their price targets on the stock, and investors have sold off shares, with concerns lingering about earnings growth. 

2. Margin attack
Despite strong full-year outlooks from Intel (Nasdaq: INTC) and PC maker Hewlett-Packard (NYSE: HPQ), some investors are keeping a distance from hard-drive makers over concerns of oversupply and pricing pressures. Compared with flash-memory maker Sandisk (Nasdaq: SNDK), which reported stable pricing and higher margins in its most recent quarter, Western Digital warned of falling first-quarter margins, echoing a similar forecast from competitor Seagate (Nasdaq: STX).       

3. Heated competition
With Seagate holding a strong lead in the enterprise space, counting giants like IBM (NYSE: IBM) as major customers, some CAPS members are skeptical that Western Digital can maintain a leading position over the long haul. And while Western Digital outsells major rival Seagate in terms of volume, technologies like flash memory and solid-state drives are gaining ground in mobile and other consumer device markets, a trend that could make it tougher for Western Digital to keep up with peers.

To see details of what CAPS members are saying now about Western Digital, just click on over to Motley Fool CAPS and have a look -- or add your own thoughts directly to this story in the comments box below.

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