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good afternoon I want to thank you all so much for being here today we are LC DG capital and we've initiated coverage on Western Digital with a Buy rating and a target share price of forty seven dollars representing a 24 percent upside potential we believe that there are three key factors supporting this by rating the first is the veteran management team that has been able to successfully adapt to this dynamic tech industry second is the fact that WTC has become the market leader approaching 50% market share and finally is the company's extraordinary ability to generate large amounts of cash flows before we go on I would like to introduce our team my name is Allison LOX this is odd Adele Rosso Macy Chen rich gram and Amir ganor BA further supporting our by rating is W DC's competitive cost structure which we think is going to be a sustainable competitive advantage additionally this industry operates in two years cycles of peaks and troughs and WTC is currently in one of those tops representing a unique growth and buying opportunity to look a little bit deeper into W DC the firm operates in the memory industry manufacturing hard drives for consumers desktops notebooks and enterprises and they've recently entered the solid state drive segment of the industry they've been able to successfully transform their business models through the strategic use of acquisitions such as the acquisition of silicone systems in 2009 to enter the SSD market and most recently they're an acquisition of the hard drive segment of competitor Hitachi the memory industry has recently entered the maturity stage of the life cycle this has brought about four key success factors for firms going forward they need to be able to market differentiated products use automated production have quick adoption of new technology and finally have user-friendly brands wotc is back to basic strategy of making reliable hard drives with high efficiency and speed at a low price positions them perfectly to meet these factors furthering our confidence in a by rating they have a strong brand which allows them to differentiate they've been able to vertically integrate to achieve automated production while they have not always been a first mover for new technology they've always been a fast follower and finally they have a reputation for being extremely user friendly this all culminates in the strong financial position we see today with a current share price of $39 I'm now going to pass it on to auda who addressed the key drivers of our valuation there are key three key drivers in our $47 by writing the first is a bigger emphasis on higher value-added products which are consumer electronics brandon and enterprise these are not dependent on the traditional segments such as notebooks and desktops which have a declining average selling price we believe there will be double-digit revenue growth in these three segments over the next five years and grow from 24% to 38% of W DC's product mix we also see this in the recent acquisition of Itachi because they were a major player in the enterprise market the second major driver is increasing demand in emerging markets especially Asia Asia just last year PC shipments were up 9% because they are growing status symbol in Asia we believe it will grow from 53% to 60% and W DC's Geographic mix because an average of 10% growth over the next five years unlike stagnant markets WCC's exposure in asia will help to continue to grow revenue and finally the last major drivers W sees cost competitiveness and the ups and downs of the 2-year industry cycle TT sees management is devoted to improving margins because they know how important it is in this industry we see this with their recent implementation of just-in-time manufacturing and the acquisition of Itachi will to create cost synergies and now may she will discuss risks to our valuation our valuation also incorporated analysis of potential grassed to WTC which mainly come from two areas one intensified competition which posed price pressure to hard drive market to market cannibalization risk coming from new technologies we nevertheless believed that WTC has a capability of overcoming these challenges and even turning them into opportunities let's look at industry competition first of all the ability see if it faces threats from both pure players such as take each technology as well as conglomerates such as Toshiba and Samsung Deborah DC however has multiple advantages over both kind of competitors which gave some which will help them capture market share in the long run competitor Seagate Technology double DC has the advantage of providing high quality products with lower price in the mean time the ADC as a company has achieved more stable financial performance in the past as well as a healthier capital structure compared to conglomerates which manufacture a variety of products WD sees focus on hard drive markets provides them with superior technology innovation ability which is critical to a high tech industry now looking at the other source of risk which is new technologies has which has the capability of cannibalize the hard drive market we're talking about solid-state drives that are favored by certain industries because with higher performance the release they have however early into this market and they will have 10 years of transition time to capture market share finally we have habits and I call computing services which will likely reduce the retail consumption of the hard drives nevertheless we believe that this information consumptions services will not necessarily decrease the overall demand of hard drives but merely shift the focus from retail consumers to hard to enterprise consumers mainly storage service providers such as Google this will open up new market opportunities for WDC now my colleague Richard will discuss our version summary so in order to arrive at our target share price of forty seven dollars per share we use two different valuation methodologies the first valuation methodology that we used was a trading market comparables methodology and we weighted it at 50% and as we arrived at our target share price we did this because we believe that trading comparables most accurately captures the markets current valuation of Western Digital particularly considering the fact that Western Digital is at the bottom of its two year industry cycle the second valuation methodology that we that we use is a discounted cash flow analysis with the Nevada exit multiple as well as the Goron growth method we chose to use the DCF because we believe that the DCF most accurately Western Digital future growth potential future growth potential that the market is currently not valuing in now as you can probably see we gave the Goron growth method much less weight than the even exit multiple we did this because Western Digital market will not grow in the perpetuity so using so giving the Goron growth method more weight would not be conservative one valuation methodology that we chose not to use is a present transactions methodology we did this because we do not believe that Western Digital is an acquisition target and we did not want merger premiums to enter our valuation analysis now moving on to the comparable companies analysis we chose five different comparables the first is CA technology which is a pure play competitor to Western Digital the other four SanDisk EMC STC and micron were chosen because they all specialize in one line of business that is memory and they're not conglomerates additionally they all have the same environmental factors affecting their businesses they all are selling commodity products that have declining SPS and they also all compete on their cost structure additionally all five of these companies are constantly trying to innovate their commodity products and add value-added services which is very similar to Western Digital as a result we arrived we looked at the IVA da Eva and revenue multiples for these companies and arrived at its share price range of 38 to 51 dollars per share now Amir is going to talk about the DCF in the future growth potential for Western Digital to take a look at WD sees future we have to look back what they have done well for 20 years and that is generate enormous amounts of cash in fact this will peak in 2014 at 1 point 1 billion dollars adjusted for 2 years cyclicality in the industry these free cash flows were then taken and applied into the DCF using an even on multiple of 4 point 7 5 x which is the 40th percentile and yielded a conservative range of 40 to 55 dollars share price then the gordon growth method was applied with a 1% implied growth rate yielding a much more aggressive range of 45 to 60 dollars per share but let's take a closer look of what's happening inside w DCF right now first we take a look at their mo da and even margins and we noticed that years moving forward the volatility is starting to be smooth it out this is because WD c is moving from a market leader to a market defi and has the ability to squeeze much of the volatility out of it due to economies of scale that the competitors are being plagued by second we take a look at the profitability and while these numbers slide off 1/2 to 1% in years moving forward this doesn't tell the full picture because ASP s are declining a much greater price finally return on equity seems to drop up but this is a distortion due to a massive amount of cash accumulated and is resolved by the Hitachi acquisition which is a deployment of cash overall this is a company that has the financial resources to accomplish their strategic vision more importantly it has a management team that is passionate about this business and has the wherewithal to complete substantial transformations to put this company in an era of new growth and most importantly this company gets what they do they focus on the competitive cost structure which has created a veritable moat around this business warding off competitors allowing management to survey the landscape for new acquisitions to create corner pieces to add stone by stone to this castle thank you and I'd like to open the floor for questions