January 10, 2009, 4:03 am
CES: Seagate CEO Watkins Says December Was “Terrible”
Posted by Eric Savitz
Seagate (STX) CEO Bill Watkins told Tech Trader Daily on Friday that December was “just terrible” in terms of disk-drive demand, due in part to a sharp drop in distribution channel inventories. Watkins said channel inventories for disk drives are the lowest he has ever seen, as low as four weeks, and notes that distributors are having trouble getting credit.
Watkins notes that the company will announce a restructuring sometime this month which will likely result in a reduction in production capacity and significant layoffs. The company currently has about 50,000 employees worldwide; it’s not hard to imagine there will be thousands job cuts.
On December 10, the company cut its Q4 revenue forecast to a range of $2.3 billion to $2.6 billion, down from previous guidance of $2.85 billion to $3.05 billion. But Watkins says that demand in the final month of the year was even worse that he thought.
Meanwhile, Watkins says he continues to expect substantial consolidation in the industry, with Fujitsu shopping its drive business, and head-maker TDK this week announcing a large loss and substantial layoffs. He thinks the industry will eventually boil down to four players: Seagate, Western Digital (WDC), Hitachi and one other player from Japan, perhaps some combination of TDK, Fujistu’s drive business and Toshiba. (He adds that Samsung also “can stay in the game and keep losing money.”)
However, Watkins said Seagate is not going to buy any rivals. “There is nothing I can do that would make any sense to me,” he says. |
