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

To: John O'Neill who wrote (7825)	5/17/1998 7:46:00 PM
From: LightPen	Respond to of 9124

Seagate says worst over for disk drive industry By Josephine Ng SINGAPORE, May 17 (Reuters) - The worst is over for the disk drive industry, Seagate Technology's (SEG - news) chief executive Alan Shugart said on Sunday. ''I think it has bottomed out. We have seen inventories really dropped. The competitors all seem to have cut back capacity to manufacture like we have done,'' Shugart told reporters at an informal meeting in Singapore. Shugart was in Singapore for a regular meeting with employees. Plummeting prices due to worldwide excess capacity in the industry have been pressuring performances of big disk drive makers Seagate, Quantum (QNTM - news) and Western Digital (WDC - news) over the last year. Seagate in its latest third quarter results reported a loss of $128.5 million or 53 cents a share, against a net income of $256.8 million or $1.01 a share in the same quarter a year ago. This included a restructuring charge of $165.7 million to cover the cost of laying off about 10,000 workers. Shugart said price erosions in the second half of 1998 should not be as bad as in the first half but he declined to say how much prices had fallen in the first six months. ''We ought to see bigger demand for disk drives in the last half of 1998 compared to the first half,'' he said. He said recovery signs might not be obvious until the later part of the year. The bulk of demand for disk drives would continue to come from the United States, he said. In Asia, Seagate was surprised that in its third quarter ended March, sales contribution from the region had not dropped but stayed similar to that in the second quarter. But Europe's contribution fell, going against bullish expectations since the computer industry there was supposed to be doing well, he said. Shugart declined to predict whether Seagate would return to the black in its fourth quarter but said: ''I sure would be disappointed if we weren't (profitable).'' He said the steps the company had taken in the last six months in downsizing were to put it in a position to make profits at lower revenue levels. The company had cut its staff to 88,000, from 111,000 six to nine months ago, he said. At present, Seagate did not expect to cut staff on a large scale, although cuts could never be ruled out, he said. Seagate was also working on shortening its production cycle to cope better with new build-to-order processes adopted by personal compurter makers, he said. Shugart said Seagate had cash and marketable securities of $1.72 billion as of its third quarter, which he said was one of its strengths to weather any storm in the industry. On reports of Seagate's loss in market share to smaller players like IBM (IBM - news), Japan's Fujitsu (6755.T) and Maxtor Corp, a unit of Korea's Hyundai Electronics (00660.KS), Shugart said he was sceptical of data provided by research houses. At a time when companies were cutting prices to reduce inventories, market share was not meaningful, he said, but conceded that IBM and Fujitsu had done a good job at penetrating the high-end market in the last two quarters. On Asia's economic problems, he said he was confident of a recovery in the region. He still expected the Asia Pacific eventually to make the same contribution as Europe to Seagate's revenue. Seagate was not making any changes in its Asia production except to move its Thailand disk drive manufacturing to Singapore. Thailand would focus on making components, he said. Manufacturing of printed circuit boards in Batam in Indonesia was unaffected by the unrest in Indonesia so far, he said. But Seagate was keeping a close watch to make sure employees were safe, he said. --------------------------------------------------------------------------------