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

To: Raptech who wrote (5596)	9/6/1998 11:21:00 PM
From: La Traguhs	Read Replies (1) \| Respond to of 7841

Did we all catch the 4.3 GB Seagate Medalist at Fry's for $119 (West Coast). And who says inventory problems have been resolved in the channel? Regards, LT

To: Raptech who wrote (5596)	9/7/1998 6:42:00 PM
From: DJBEINO	Respond to of 7841

New chief exec at Seagate hits ground running Sept. 7, 1998 BY ADAM LASHINSKY Mercury News Staff Writer IF the burden of replacing a summarily sacked industry legend is weighing heavily on Seagate Technology Inc.'s (NYSE, SEG) Stephen J. Luczo, the new CEO isn't showing it. In the six weeks since the 41-year-old former investment banker replaced Seagate co-founder Alan F. Shugart, Luczo has reshuffled the disk drive maker's senior management, finalized plans to fund a new research facility, rejiggered a key software subsidiary and chit-chatted about strategy with industry heavyweights like Ingram Micro Inc. CEO Jerre Stead and Sun Microsystems Inc. operations chief Edward J. Zander. In contrast to that burst of activity, he's also helplessly watched a pummeling of Seagate's stock that preceded -- and exceeded -- the broader market's fall. At Friday's close of $18.25, the Scotts Valley-based company's stock is down nearly 40 percent since mid-August alone, apparently in the absence of any noteworthy negative news. Seagate's problems are well-known. It's been chronically late in introducing new products, allowing competitors like Quantum Corp. (Nasdaq, QNTM) and Maxtor Corp. (Nasdaq, MXTR) to snatch away key customers. Time-to-market issues have plagued Seagate from the high end to relatively inexpensive disk drives for desktop computers. In its most expensive drive line, a delay caused the company to miss out on more than $1 billion in revenue in the last year, Luczo reckons. In desktop products, Seagate was as much as nine months behind industry leaders, a gap Luczo says it's narrowed to a still unacceptable two months. The new CEO -- whose strength is strategy, not engineering or manufacturing -- is so convinced he's put the structure in place to solve Seagate's product-development woes, he's staking his job on it. ''On the desktop, I want to be the time-to-market leader at this time next year,'' he says, while darting around his office, the same one he occupied a year ago when he was Seagate's chief dealmaker. ''If it's a year from now and we're flailing about . . . I'd say let someone else figure it out.'' Luczo's trying to figure it out because Seagate's board lost patience with Shugart, 67, who wouldn't go quietly when asked in late July to step aside. The board elevated Luczo less than a year after he became the company's No. 2 executive. Weeks later it agreed to pay Shugart a separation package worth between $8 million and $10 million. Luczo allows that he wasn't surprised by Shugart's firing inasmuch he knew the board was frustrated by the reluctance of the colorful Shugart to plan for succession. Shugart -- who helped invent the disk drive while at International Business Machines Corp. (NYSE, IBM) and also once ran his dog for Congress -- memorably told Seagate employees the only way he intended to leave was by being fired or dying. Luczo says he's still in touch with Shugart but that he's got no quibble with how his former mentor exited the company. ''If I thought Al got screwed, I wouldn't be here,'' he declares. The hallmarks of Luczo's leadership have been a streamlining of Seagate's product-development structure and a partial abandonment of its dogmatic devotion to vertical integration. To wit, the company remained so committed to making each of its components on its own that when it slipped behind in developing one part the rest of the operation faltered. Luczo says he remains a fan of vertical integration -- and that outsiders have overstated the importance of his willingness to buy from outside vendors -- but makes clear that getting products out the door on time is more important than satisfying an internal division's goals. The reason for the company's former love affair with making all its own parts is straightforward: A successfully integrated manufacturer gains operating leverage that leads to maximum profitability. Indeed, before its product misses Seagate was a cash-generating machine. For four years from mid-1993 to the middle of last year, Seagate's stock handily outperformed the S&P 500 Index, racing from below $10 to more than $50. The stock's return trip has made Wall Street wary, despite Seagate's cash and near-cash reserves of $1.8 billion. Of the 16 analysts who follow the company, seven rate the stock a ''hold,'' even at its depressed level. ''The problem I have is how profitable can they really get?'' wonders Joel Pitt of Credit Suisse First Boston Corp. in New York. ''The disk drive industry is never -- which I define as three years -- going to get as profitable again as it looked a year and a half ago.'' Still, Seagate's girth ensures its stock ''will go to 30 again, whether or not they deliver,'' says Pitt, assuming the stock market rises. ''Basically you buy Seagate at 20 or under.'' Luczo isn't confident about the overall market or the economy. In fact, he believes the company's strong balance sheet will allow it to whether the storm while continuing to invest $500 million this year in research and development. ''The last year has been a disaster, and I'm the first to admit it,'' he says. If the coming one is to, he may be among the first to feel it. mercurycenter.com