Feeds

Seagate loses $3bn in a year

But market is turning up

Choosing a cloud hosting partner with confidence

Seagate lost $3.09bn in its fiscal year to the end of June, with revenue plummeting 23 per cent to $9.8bn. In its final 2009 quarter it lost $81m, on revenue 19 per cent down at $2.35bn, compared to a profit of $160m a year ago.

The bare numbers are horrible but the outlook is much better.

The company spent $106m on restructuring and allied activities in the quarter. A six month cost-reduction and restructuring programme is showing results. Steve Luczo, Seagate's CEO who took back the reins from the ejected Bill Watson at the beginning of the year, said: "The overall organizational, operational, technical and product progress we have made during the last six months is reflected in our financial results for the June quarter and demonstrates meaningful progress." He also added: "We are also seeing signs that the storage markets are improving." He does not think this is due to inventory build-up in the channel.

The company's outlook is for first fiscal 2010 quarter revenues of $2.4bn - $2.6bn, higher than previous guidance of $2.35bn - $2.5bn. Seagate hopes to improve its margins in the quarter by 200-350 basis points.

These are pretty important numbers. The gross margin in the quarter was 17.6 percent, with previous guidance indicating about 15 percent. Seagate is now hoping for about 20 per cent next quarter, an increase from previous expectations of 18 per cent.

However, it warned that "the September quarter outlook does not include the impact of any potential new restructuring activities, future mergers, acquisitions, financing, dispositions or other business combinations the company may undertake."

Stifel Nicolaus analyst Aaron Rakers is hopeful, pointing out: "The company's transition to new areal density platform (250GB/platter 2.5-inch and 500GB/platter 3.5-inch) drives is progressing." He reckons the company had approximately half of its production from these new areal densities and is looking for 80 per cent in the next quarter. Luczo said: "For our long term growth we have redeployed our technical resources to refocus on areal density leadership across all of our products."

Seagate's Robert Whitmore, EVP and chief technology officer, said: "Launching new products at the next areal density point continues to be an important priority as well and several significant milestones were achieved in the June quarter. We delivered our aerial density leading 2.5-inch two disk 640 gigabyte drive (320GB/platter) to our US retail partners and will continue to ramp that product within this quarter. "

Seagate thinks it's important to have capacity leadership in retail products, for shelf appeal, and it hasn't had that over the past couple of years, which weakened its retail business.

Talking of discrete track recording and bit-patterned media, areal density improvement technologies slated to succeed the current perpendicular recording technology, Whitmore commented: "We see conventional perpendicular recording expanding for the next several generations. We’re making investments so that we’ll be ready for the conversion but we don’t see that for a number of years in front of us."

Turning to solid state drives, he said: "Our solid state product development is on track and we remain focused on delivering our first enterprise SSD later this calendar year. We are fully engaged with our customers and supply chain partners and remain committed to delivering solid state storage devices with the performance and reliability this market demands." The first deliveries will be to OEMs, with much of 2010 taken up by qualifications by the OEMs.

In summary Rakers said: "Ample upside remains in this restructuring story that looks to benefit from an improved underlying demand environment," particularly in the enterprise market.

The recession appears to be bottoming out and even turning up for Seagate, although the way ahead still looks murky. Profitability hopefully beckons. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
The cloud that goes puff: Seagate Central home NAS woes
4TB of home storage is great, until you wake up to a dead device
Azure TITSUP caused by INFINITE LOOP
Fat fingered geo-block kept Aussies in the dark
You think the CLOUD's insecure? It's BETTER than UK.GOV's DATA CENTRES
We don't even know where some of them ARE – Maude
Intel offers ingenious piece of 10TB 3D NAND chippery
The race for next generation flash capacity now on
Want to STUFF Facebook with blatant ADVERTISING? Fine! But you must PAY
Pony up or push off, Zuck tells social marketeers
Oi, Europe! Tell US feds to GTFO of our servers, say Microsoft and pals
By writing a really angry letter about how it's harming our cloud business, ta
SAVE ME, NASA system builder, from my DEAD WORKSTATION
Anal-retentive hardware nerd in paws-on workstation crisis
prev story

Whitepapers

Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Getting ahead of the compliance curve
Learn about new services that make it easy to discover and manage certificates across the enterprise and how to get ahead of the compliance curve.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.