Seagate to re-enter market to produce laptop-PC drives
THE WALL STREET JOURNAL
SCOTTS VALLEY, Calif. — Seagate Technology Inc. said it would resume making disk drives for portable computers within 14 months. Seagate, the world's largest disk-drive maker, abandoned the laptop market in January 1998, because it couldn't make new generations of drives quickly enough to be profitable.
A SPOKESMAN SAID the company has a team of engineers developing new drives for portable computers, and expects them to be ready in about a year. “We feel we need to be in that market,” the spokesman said. He declined to discuss details of the drives Seagate would offer.
Seagate's shares rose $2.3125, or 7.6%, to $32.6875 in New York Stock Exchange composite trading Thursday.
Seagate's exit from the laptop business left the market to International Business Machines Corp., Toshiba Corp., Fujitsu Ltd. and Hitachi Ltd., all of whom make portable computers. The relatively small number of competitors meant that prices of disk drives for laptop computers haven't been falling as rapidly as other types of drives, said Crawford Del Prete, a vice president at market researcher International Data Corp.
Analysts said Seagate might fare better in its return to the market because it is a technically stronger company and there are fewer competitors. Since the mid-1990s, Western Digital Corp., Quantum Corp. and Maxtor Corp. all have stopped making drives for laptops. Seagate far exceeded analysts' expectations for profit in the fiscal second quarter, which ended Jan. 1, suggesting that it has begun to execute a turnaround under new Chief Executive Officer Stephen Luczo.
“I have every reason to be optimistic that Seagate will be more competitive,” said Jim Porter, president of market-research firm Disk/Trend. Mr. Porter said Seagate's presence would help lower the cost of laptop disk drives.
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