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

To: Duker who wrote (488)	1/29/1999 5:46:00 AM
From: Duker	Read Replies (1) \| Respond to of 1989

Seagate's Luczo Sees Disk Drive Mkt Expanding 15-20% In '99 SINGAPORE (Dow Jones)--Major disk drive maker Seagate Technology Inc. (SEG) expects worldwide unit shipments to rise between 15% and 20% in 1999 and is currently ramping up production at its key Singapore plants, company executives said Friday. Stephen Luczo, president and chief executive, said, "Unlike in prior years, inventory seems pretty low now" and there's been a pick up in demand from both original equipment manufacturers and distributors. In a short stopover in Singapore, Luczo told the press that Seagate expects its desktop drive business to exceed the overall market growth rate. There's a "good chance our desktop (business) may grow quicker" he said. Senior vice president for Asia Pacific drive operations, Mike Stears, said Seagate is also looking to expand the headcount at its flagship Singapore plant in Ang Mo Kio, which is responsible for making most of the company's high-end disk drives. It will be introducing its 16- and 36-gigabyte high-end drives for manufacturing at its Singapore plant as well as the company's first Singapore-designed drive featuring 4.3 gigabytes in storage capacity. The Singapore-designed drive will be targeted at sub-U.S.$1,000 PCs, the company said. Scotts Valley-based Seagate has major disk drive manufacturing operations based in Singapore. Coupled with several other large multinationals, Singapore generates about half the supply of the global output of disk drives. The company's Singapore-based regional headquarters also manages manufacturing operations in Malaysia, Thailand and China. In Singapore, the company has a 14,000 headcount. Luczo, who took over from company founder Alan Shugart last year, said "things are starting to come together for the company" after the downturn of the past two years. The company has regained its financial strength and is now head-to-head with IBM in the high end segment of the disk drive business. By introducing new desktop and high-end 18- and 36-gigabyte drives late last year, "the company has closed the gap" with the competition. "We're not stopping here" and "it's absolutely essential" that the company pressed on, he said. The company recently announced a net profit of US$104 million for its second quarter to Jan. 1 compared with a net loss of $183 million for the same period a year ago. Gross margins have climbed to last quarter's high of 23.8% and most of it has been due to operating improvements. Commenting on the high-end segment of the business, Luczo said "the market is growing rapidly" and "good growth" can be expected. Seagate's new products are expected to last till 2000, he added. "We are back and we think we will take market share back," he said, referring to the loss of market share as a result of IBM's entry into the business a year ago. Meanwhile, Stears said Seagate "expects big volumes" for its forthcoming 4.3 gigabyte product. The company is using this product as a test bed to develop drives and transfer them to production as soon as possible, he said. Such products will "undergo steep ramp ups," said Stears, adding that on the longer term horizon are plans to make its high-end 50-gigabyte drive in Singapore. Company executives emphasized that Singapore will remain a key production site within Seagate despite the much repeated claim that manufacturing in the country had become expensive. Luczo said he met officials from the Economic Development Board, Singapore's key investment attraction agency, two months ago in California. About five to six initiatives were discussed and Seagate is now considering pursuing them, which could increase its presence in Singapore, said Luczo. Despite high operating costs in Singapore, it is a question of how Seagate is able to manage its business and Singapore has "strong technical resources" and a "significant supplier base", said Luczo. Geographically, he said that Europe is turning out to be a very strong market for the company, accounting for about 39% of sales. In Asia, "business looks like it's going to grow," he said. The region accounts for about 15% of the company's overall sales, down from a high of about 17%. -By Joseph Rajendran; 65 421 4800.