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

To: Factfinder who wrote (4977)	5/6/1998 10:50:00 AM
From: DJBEINO	Read Replies (1) \| Respond to of 7841

Seagate bets on a rise in demand SHANE ABRAHAMS Despite a succession of poor quarterly results, hard-drive maker Seagate Technology believes better days are ahead, says international sales senior vice-president Joel Stead. The firm is betting on the rising demand for high-end drives and a new, low-cost drive aimed at sub-US$600 PCs to help it return to profitability. Last month, Seagate announced a $128.5 million loss on revenues of $1.7 billion for its third quarter, losses that follow several other unprofitable quarters. Mr Stead said 1997 was "a very rough year, and going into 1998, it is still a rough year". The company blamed its performance on a worldwide oversupply of hard drives, particularly at the low end. "As a result of this over-supply, drives were being sold at below cost, which led to very predatory pricing," Mr Stead said. He dismissed the regional currency crisis as a key factor in the company's poor performance. "China continues to boom, which is helping to offset any decreases in the Asean area," he said. Seagate lost almost $100 million in foreign currency hedges the company made to pay its workers in Singapore and Malaysia. Revenue from the Asia-Pacific region also fell, and accounted for only 15 per cent of global revenue, compared with 20 per cent before the crisis, Mr Stead said. He was optimistic business would improve over time, with Asia accounting for 30 to 35 per cent of the company's worldwide revenues. Seagate was continuing to boost production at its plants in Malaysia, despite the 1,700 jobs it cut from its Singapore plant earlier this year as part of a company-wide restructure. In total, 10,000 employees were axed worldwide. Mr Stead said the end of Seagate's financial troubles was coming soon, as the industry was beginning to see supply shortages in some sectors. "We are starting to see very significant increases in demand," he said. Growth initially would be driven by demand for high-end drives for servers, but Mr Stead also saw the growing market for inexpensive computers creating a demand for low-cost PC drives. The next industry trend would be a sub-US$600 PC, Mr Stead said. And to serve the market, Seagate was developing a low-end 2.1 Gb Mettalist drive. The new drives would be manufactured at Seagate's new mainland facilities, which would be dedicated to low-end PC disc drives. Mr Stead said this would ensure the company had the capacity to meet demand. He also was optimistic no further job cuts would be made. "We are continuing to work on efficiency and are putting in more automation, but will let employees numbers go down by attrition rather than job cuts," Mr Stead said.