The Motley Fool Take

What will it take for hard-drive maker Western Digital (NYSE: WDC) to get some market respect?

When the company released its thirdquarter earnings report, exceeding expectations, its shares jumped 5 percent. But then management made a few guarded comments about the coming quarter: There’s some excess inventory floating around in the PC manufacturers’ pipelines, and it expects a correction in the fourth quarter. That hurt, sending shares back down.

That might be understandable if Western Digital were an overvalued high-flier. But along with sector rival Seagate Technology, Western Digital has been a mouthwater- ing value play for a long time. The market expects SSD technology as presented by STEC and SanDisk to make hard drives obsolete, and it was a mature low-growth market with thin margins to begin with.

Thus, Western Digital’s cautious market outlook is simply a responsible approach to take. Wouldn’t you rather invest in honest management teams than spin masters?

The cautious outlook may have been too conservative. Tablet computing should be hurting the hard-drive market because those laptop-replacement gadgets tend to ship with memory-based storage. But that may not have happened yet, as gross margins have been improving at Western Digital.

Western Digital deserves a spot on your watch list, if not in your portfolio. (The Fool owns shares of it.) ¦