In further developments re the Seagate drama, headline reads:
Close, But No Cigar. IR informed me that Wednesday's conference call with
Happy Shugart and the Mirth Makers is not available for recorded playback...
...but, Deb Peterson at Seagate very kindly returned my call today, and we talked about SEG's official stance on the 4 & 9 gig programs (which many of us consider to be the main anvil perched atop our SFLX shares during this raging ECM market.)
SEG feels that they lost 4-7% of market share to QNTM and WDC in this high end segment in last Q. SEG held a 60% market share prior to this loss, and they expect to stabilize at 48-52% market share.
The loss in market was accompanied by inventory issues. During the period when the high end drives were on allocation (and SFLX couldn't make enough, due to the component shortage) distributors and/or OEMs stuffed their warehouses. Deb Peterson distinctly said that SEG feels this inventory readjustment is pretty much over.
Another factor contributing to the problem was the omnipresent gremlin
called seasonality. This was not expected to affect the high end segemnt due to the assumed short supply of drives in the first place. But with them off allocation, it's apparently now a factor. Peterson said that this is expected to continue through mid to late August, when demand will resume.
She stated that the company continues to feel that the high end will show the greatest growth going forward.
We'll see what Healey and Castleman tell us on Monday, but I have hunch that they'll still be making large volumes of 4 & 9 gig drives for SEG in the future, if for no other reason than pure math. If they couldn't make sufficient quantities to satisfy SEG's demand prior to this recent slowdown, and SEG has lost only 7% market share (of an unrealistically large 60% total), and both SEG and SFLX worked together to solve a critical component issue related to these programs, then it seems to me they will eventually resume capacity production. I don't think SEG is going to abandon the fastest growing, highest margin segement of their business without a fight. JMHO.
Deb Peterson can be reached at 408 439 2371.
Bill |
