October 21st, 2011 by Brian Beeler
Seagate Q1 2012 Results
A day after Western Digital reported their quarter, Seagate (NASDAQ:STX) reported results from the quarter that ended in September. The Seagate quarter is highlighted by shipments of 50.7 million units, the near-completion of the Samsung HDD acquisition, 1TB platters finally in production and commentary on the impact of Thailand's severe flooding.
Seagate lost three points of market share in the quarter. CEO Steve Luczo highlights three reasons for the loss; price undercutting by competitors while Seagate was trying to increase pricing to offset rare earth metal cost increases, Seagate raised notebook hard drive prices in anticipation of demand, which wasn't well received and lastly, Seagate lost share in Asia due to pricing, some of which was offset by gains in the US.
Seagate sees a total addressable market for the December quarter of 180 million units (higher than WD's forecast of 170 million) and expects to more than regain their market share loss from the September quarter, largely due to the fact that Western Digital may only be able to product half of the drives they need to. Seagate is expecting to ship 40-50 million units in the December quarter, with full recovery of production in the middle of next year.
The 1TB platters destined for 3.5" desktop hard drives lagged in development and are just now starting volume production, many months later than announced publicly. Seagate is expecting to ship millions of drives with the new 1TB platters in the current quarter though, a good sign for consumer and enterprise users who are looking for higher density storage solutions.
The European Commission has approved Seagate's proposed purchase of Samsung's hard drive assets. Seagate continues to work with other governing bodies but isn't expecting any trouble, the transaction should close before the end of the calendar year. Integration of Samsung's HDD business is expected to start in the first quarter of 2012 with complete integration complete by the end of that year.
Seagate is enthusiastic about Samsung's 500GB platters used in notebook drives. "We believe this is the industry's leading notebook platform, shipping approximately 4 million units in the September quarter."
Seagate has far less exposure to Thailand than Western Digital, but they're still affected to a degree, certain suppliers are shut down or limited and some components are more difficult to obtain. That said, all of Seagate's Thailand facilities are operational and are running at full production.