Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Seagate Technology -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (4141)	11/19/1997 1:47:00 AM
From: Joe E.	Read Replies (1) \| Respond to of 7841

<<Late Tuesday afternoon, long after the market had closed, Seagate reiterated its intention to review its operations and restructure as necessary. Last month, Seagate said costs related to the restructuring could be as high as $100 million, but the outlook is even more dire now, as the company expects the charges to exceed that amount. As a result, Seagate will not meet Wall Street's profit expectations for its second quarter, which ends Jan. 2, 1998. >> I just got my copy of the SEG annual report for fiscal 1997. (I had been relying on the 10K). Here is a quote from the Chairman's letter in the annual report which IMO says everything about SEG's current problems: "Computer users expect global technology leaders to stop pushing technology at them, and start helping them solve their information needs." This quote appears on page 23 after a lengthy and artsy manifesto, while the first NUMBER appears on page 24. IMO Mr. Shugart has drifted away from disk drive engineering and into visioneering. Seagate is still a small company compared to the size of the industry it serves. Maybe IBM can afford a little visioneering, but certainly not Seagate. This is like Goodyear deciding that because of their vast size and wisdom and experience in designing airplane tires, they will take on Boeing in manufacturing passenger jets. IMO the world is not eagerly waiting around for Seagate to turn its attention to software to help the world solve its information needs. The world wants Seagate to make better, faster, cheaper disk drives. The technology in the disk drive industry is advancing faster than the fabled chip industry, but Mr. Shugart figures Seagate senior management has plenty of time to dabble in the software business, and still lead the advancing technology in the high end of the disk business. Well, IMO, he was wrong about this. Of all the possible things that may be interesting to Seagate, the disk drive biz is the only one that really matters. Unfortunately this is the one where they snoozed. Sure, some may say that this is bull, that SEG has fine high end drives, and i don't argue. What they don't have is high end drives that command any kind of margin. This they might have had if they hadn't focused on the softer side of Seagate. So, in the upcoming restructuring, they should IMO dump the software. Instead they will, probably, write down some of their fiscal 1997 investment in disk drive technology that is now redundant or obsolete. Losses in foreign exchange don't bother me since I don't expect them to beat Soros in forecasting exchange rates. Losing their focus in their major line of business is annoying. Time to shift back to what they know best. Sell or spin off the software. If management wants to go with the software, fine.