Article in Electronic News Online (April 27th) on disk drive makers has some bearing on Adaptec but the article does not address SCSI cards or controllers. Helps provide context for Adaptec's plight.
sumnet.com
Some excerpts:
"Disk drive companies and companies selling to the PC market are going through a bloodbath. Several of them reported severe revenue
declines and losses--or sharply reduced earnings--in the most recent quarter. "
Seagate CEO: "The whole computer business, including high performance, started to slow down eight or nine months ago. Disk drive companies had been building capacity to meet demand in all markets, but then growth slowed and we ended up with too much capacity, too much inventory. It will take a few more quarters to work out. We're starting to see a little bit of light. At least, we've all stopped building capacity."
Quantum CEO: "Oversupply conditions for the desktop hard disk drive market have persisted, resulting in continued aggressive pricing for the second consecutive quarter." The company added that it had reduced its inventory levels from the previous quarter by $108 million and also reduced its channel inventory levels.
Read-Rite statement: "The disk drive industry continued to experience a product oversupply during the second quarter of FY98, which reduced demand and significantly increased pricing competition in the recording head manufacturing sector," stated the company. To reduce costs, the company plans to reduce overall headcount by about 1,800.
Applied Magnetics Corp statement: "Operating losses and the decline in revenue for the first half of FY98 are a reflection of the current softness in market demand being experienced by component suppliers to the disk drive industry as well as declining prices and a change in the mix of head-gimbal assembly and headstack assembly products."
StorMedia, Inc: The company said its performance was negatively impacted by "continuing adverse industry conditions resulting in ongoing overcapacity and price reductions."
Analysts:
At DiskTrend, Bob Katzive, VP, said: "The worst may be over. Everyone I talk to thinks the situation has bottomed out and we are in a one or two-quarter recovery period. By fall all the excess inventories will be absorbed and the industry should be looking healthier," he said.
At Dataquest, Kimball Brown, who oversees the computer group, said the "slowdown" in PCs is just an adjustment of commercial PC buyers waiting for the right price. "They see $799 PCs at Good Guys, but they see $1,400-$1,600 for commercial PCs. They just want the better pricing."
Starowl |
