Seagate Sees Recovery In Drive Market In 2nd Half; Prices Seen Down
DOW JONES ONLINE NEWS January 23, 1998 8:22 AM
SINGAPORE -(Dow Jones)- Seagate Technology Inc.
said Friday it expects the market for disk drives to
recover in the second half of 1998 with price declines of
about 15% a quarter likely to persist until then.
Joel Stead, the company's senior vice president and
managing director for Seagate's (SEG) Asia Pacific
business, said Friday that the disk-drive market may
have hit bottom following the restructuring within the
industry and low inventory levels.
But it will take a few months before the disk-drive
market recovers from current levels, he said. The current
problem of overcapacity facing the disk-drive industry is
cyclical and peculiar to the industry, said Stead, adding
that the regional currency crisis had little to do with it.
The disk-drive industry has been on a cyclical downturn
since mid-1996.
Faced with intense pricing pressures and margin erosion,
the company retrenched 1,800 staff members at its
Singapore plant, which is the largest within the company.
As part of Seagate's effort to grapple with the downturn
in the disk-drive industry world-wide, Seagate
announced that it would cut 10,000 jobs world-wide.
The company has said earlier it will make a decision
about the restructuring of its plants in Malaysia and
Thailand next month.
Stead said part of the industry's overcapacity problems
arose from Asian companies like Fujitsu Ltd. (FJTSY)
and Maxtor Corp. ramping up production in order to
gain market share. As some U.S. companies have
already scaled down their operations, the speed of the
turnaround will depend on how these companies react to
the present market. Maxtor is a unit of South Korea's
Hyundai Electronics Industry Co.
Stead also said supply is most excessive in the segment
comprising 1.7, 2.0 and 2.5 gigabyte disk drives.
Competition is rapidly going to rise into the segment
comprising 4.0 gigabyte drives, he added.
A major factor for the price erosion in the 1.7-2.5
gigabyte drives segment has been a rush by
manufacturers to help computer makers launch personal
computers that are priced below $1,000, said Stead.
-Joseph Rajendran; 65 421 4800.
Copyright (c) 1998 Dow Jones & Company, Inc.
All Rights Reserved.
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