Seagate To Invest More In Asia
By Kettiya Jittapong
Wednesday February 24 11:52 AM ET
BANGKOK, Thailand (Reuters) - U.S. disk drive maker Seagate Technology Inc. (NYSE:SEG - news) said Wednesday it would invest more in Asia and continue to use the region as its manufacturing base.
''We continue to maintain our investment in Asia this year. The budget for investment in Thailand will increase from last year,'' Seagate's chief financial officer Charles Pope said in an interview.
Seagate's gross investment in Asia was about $2.5 billion as of February 1998, company officials said. Its investment in Thailand was 23.5 billion baht ($627 million) in 1998 against 18.4 billion baht ($490.7 million) in 1997.
Apart from Thailand, Seagate now has manufacturing facilities in Singapore, Malaysia, Indonesia and China with fixed assets of $1.4 billion, $577 million, $11 million and $69 million respectively, company officials said.
Pope said Seagate's Asian units had performed well in the last two years and better overall than the parent company, which faced heated competition and overproduction.
''Sales in Asia had a high level of growth of 15 percent in the last two years,'' he said, adding that Southeast Asian economies appeared co be stabilizing after the recent economic crisis and some, including Thailand, showed the possibility of economic recovery with modest growth.
Pope declined to give figures for the company's planned investments or give sale forecasts but said he expected Seagate's global revenues to continue their recent rise.
Seagate reported global revenues of $1.8 billion and net income of $104 million in its second quarter ending January 1, 1999. This compared with a revenue of $1.7 billion and a loss of $183 million in same period a year ago.
''During the December quarter, we saw a return in growth and demand. We expect that growth to continue,'' he said.
Pope said Seagate aimed to improve its market share in 1999 after a year of global corporate restructuring, including improvements in skilled labor, cost-effectiveness and product quality. But he expected competition in the market to remain very aggressive.
Pope said Singapore, Malaysia and Thailand all had the advantage of a stable government policy to help businesses.
Pope said Seagate's Thai unit, which produces disk drive components to supply Seagate facilities worldwide, had shown strong potential since the fall of the baht in 1997.
''We have a very disciplined and educated work force in Thailand. That allows very high productivity and the devaluation of the baht in 1997 made Thailand even more competitive.''
The baht was allowed to float in July 1997 and then collapsed to reach an all-time low against the dollar of 56.9 in early 1998. Since then, it has gradually recovered but is still well below the pre-float level of around 25 to the dollar.
Asked if Seagate planned to sack any employees in Asia this year, he said the company now had no plans to do so.
As part of its global restructuring last year, Seagate cut about 1,800 jobs in Singapore and 900 in Thailand. It has about 84,000 employees worldwide, of which 35,000 are Thai staff.
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