Hard drive manufacturer Seagate issued a report to the Securities and Exchange Commission saying that it has introduced a restructure that will affect peoples’ jobs.
The company will axe 1,050 peoples’ jobs worldwide, representing two percent of its headcount.
The restructuring will occur in a pre-tax charge of $53 million and these are mainly employee termination costs. It will save $113 million from the restructuring.
Seagate, like other component suppliers, have suffered from the drop in PC shipments this year, which has prompted PC manufacturers to cut their stocks of hard drive. Over the last two financial quarters Seagate has reported a drop in sales.
At the same time, there’s a lot of notebook inventory sloshing around in the channel worldwide while the effects of the strong US dollar have reduced sales and demand too.
There was a decline in the number of personal and entry level storage devices shipped in EMEA during the first quarter of this year and much of that can be attributed to the increasing use of the cloud for data back up.
According to IDC, the decline in shipments was 8.8 percent, compared to the same quarter last year. However, there’s a greater decline in revenues with a fall of 14.7 percent.
Revenues in the EMEA region amounted to $512 million.
IDC said that hard drive vendors dominate the sector, with shipments of 1TB to 3TB accounting for 70.28 percent of the entire sector.
Here are IDC’s figures for the sector for the first quarter.
HHD sales will take a canning this year as SSDs boom, according to beancounters at iSuppli.
iSuppli claims that HDD revenue is set to drop to about $32.7 billion this year, down 11.8 percent from $37.1 billion last year.
HDD revenue will be flat the following year, amounting to $32 billion in 2014, iSuppli said.
HDDs shipments dropped from 659.7 million in 2010 to 626.3 million in 2011 to 578.1 million in 2012.
Fang Zhang, an analyst for storage systems at iSuppli, said that the HDD industry will face lots of challenges in 2013.
Shipments for desktop PCs will slip, while notebook sales are under pressure as consumers continue to spend on smartphones and tablets. The declining price of SSDs will also allow them to take away some share from conventional HDDs, Zhang said.
All that being said, HDDs will continue to be the dominant form of storage this year, especially as demand for Ultrabooks picks up and hard drives remain essential in business computing, Zhang’s report said.
HDDs are still as cheap as chips, particularly when higher densities are involved and dollars per gigabyte are calculated, he said.
He expects the average selling price for HDDs to decline a further seven percent this year.
On average, HDD prices have dropped from 50 cents per gigabyte of capacity in 2007 to 10 cents per gig in 2012, according to Zhang. SSD prices have dropped from $8.79 per gigabyte of capacity in 2007 to $1 in 2012, the report said.
While it is still too early to see the SSD price in 2013, it will be down, Zhang claimed.
Hard drive maker Seagate is predicting that its first quarter revenue will be below estimates thanks to slowing PC sales and lower-than-expected growth in its enterprise business.
Seagate said in a statement that it expects first-quarter sales of about $4 billion, which is less than the $4.62 billion expected by Wall Street.
In a conference call to analysts, Chief Executive Steve Luczo muttered about slowing economic growth and shaky sales of PCs.
As a result the company’s shares fell nine percent.
The company’s fourth-quarter results were below expectations as a supplier problem affected shipments.
Still, it was not all gloomy. The company’s profit rose to $1.01 billion from $119 million, a year earlier. Revenue jumped 57 percent to $4.48 billion.
But sadly this was wiped out by the fact that Wall Street expected the company to do a lot better. A Reuters poll of analysts suggests that most expected the company to make $4.56 billion.
Part of Seagate’s problem is that it is shipping less hard disks to high-margin enterprise customers.
It must also be a little concerned about its main rival Western Digital, which trumped expectations and guided a strong fiscal 2013 on the back of sales to the enterprise.
The word on the street is that thanks to the Thai floods killing off hard-drive supply, SSD sales are going to rocket.
Certainly prices have dropped and demand is high, but according to ZDNet, one of the biggest nay-sayers to the rise of SSDs is Intel.
Intel CFO Stacy Smith said that SSDs aren’t taking off yet. Intel cut its sales outlook for the technology. Smith said that there had not been a big uptake in demand for SSDs at the moment.
Chipzilla, which would be one of the most likely hardware makers to gain if SSD’s time really had come, does not think it will happen yet.
This may be due to the fact that computer manufacturers still have a high number of conventional drives stocked in their warehouses. With all this gear stored, they won’t need to compensate with SSDs for a while.
Chipzilla also doesn’t think punters will understand why they still have to pay more money for significantly less space.
Hardware makers might not have any choice eventually. There are rumours that the hard drive shortage is more serious than it was previously thought. New HDDs might not arrive for a long time and companies will be forced to replace magnetic storage with MLC. Prices of HDDs are steadily climbing, so a partial transition might not be as difficult as it seems at first glance.
Intel fully expects SSD sales to spike in the first half of 2012. This will not be because of a shortage of HDDs but more because it believes the Ultrabook will drive demand. We guess it will also convince users of the advantages.
Smith thinks that it will be one of the ways that the industry helps offset some of the HDD shortage. But by the end of 2012, Intel reckons SSDs in Ultrabooks will be most important in the technology industry.
The drenched shores of Thailand have knocked the supply chain sideways since they began, and despite the best efforts of HDD manufacturers to run quick clean-up operations the forecasts for 2012 prove, yet again, the effect unexpected natural disasters can have worldwide.
As with the tragedy in Japan at the beginning of the year, which disrupted the supply chain for months afterwards and had an effect on most company’s forecasts, the Thai floods are expected to have caused a 4 million unit shortfall in PC shipments for the beginning of 2012.
All of 2012’s forecast has been dented and PC shipments will only expand by 6.8 percent compared to 9.5 percent, according to IHS figures.
PC makers are claiming that there are enough HDDs to go around in the fourth quarter of this year. But that doesn’t reassure for 2012 in general, as, according to senior principal analyst at IHS Matthew Wilkins, “those stockpiles wil run out in the first quarter of 2012.”
It’s not exactly good news for an industry which has been entrenched in doom and gloom. PC sales have been hard hit this year, according to data from Gartner. Netbooks, too, are tipped to go the way of the dodo. The great hope for manufacturers is in ’emerging’ markets like India, China and Brazil where demand still exists.
Companies like Seagate and Western Digital had been rushing to fix their operations in Thailand, while other manufacturers ramped up production outside of the region to compensate. IHS says the hurry to get the show back on the road could, ironically, damage the industry further.
As manufacturers seek to plug the supply gap between the beginning and end of 2012, when the year’s through the world is likely to have too many HDDs on its plate. There is a real danger of oversupply, warns IHS, which isn’t good for an industry either.
Hard drive giants Seagate and Western Digital are doing their best to see off the supply shortage following the floods in Thailand, but shipments still won’t meet demand in Q1 2012.
Although volumes should reach 140 million units the global demand for each quarter sits at roughly 170 million. It’s better than Q4 this year, where the supply gap sat as high as 35 percent.
The extra shipments should narrow the gap to 18 percent but companies will still have to prioritise where their HDDs go.
Digitimes says Seagate is penned in for 43 million units in Q4 while Western Digital thinks it will ship 26 million units for the quarter. Both have raised forecasts but they’re not out of the woods yet.
Hard drive makers have been fighting tooth and nail to match demand. Factories have sunk underwater and manufacturers have had to fight off the occasional crocodile or two.
WD put its revenue forecast up to $1.8 billion in December – compared to $1.05 billion in October. Seagate also said recovery was well ahead of schedule.
Despite the manufacturers’ frenzied clean-up operations, the disaster has had a longer lasting effect on the industry as a whole. Seagate said, though its factories are up and running quicker than it expected, there could be a hard drive famine for up to 12 months.
Indestructible hard drive mad-men at ioSafe are hosting another one of their pre-CES competitions. ’tis the season, a spokesperson tells us.
All you have to do is correctly guess how they’ll be testing their latest kit at the next show. Just to give you an idea, the team doesn’t usually bother with benchmarks: in January this year they invited us along to carry out IT support’s wet dream. Not Star Trek nudes, shooting shotguns at hard drives. The things didn’t break.
The year before, ioSafe ran over a SoloPRO SSD with a 15 ton excavator. It survived.
You can find all the details for entry on ioSafe’s bog, here.
There are some clues to help you on the way. Though ioSafe says the competition’s not open to minors, we understand it is open to miners.
The serious floods in Thailand are continuing to have a damaging effect on hard drive supply.
And now, according to a report, Acer has lowered its profit forecast for the fourth quarter and raised prices of its notebooks because its been hit by price rises on hard drives.
According to Digitimes, the floods have caused a supply problem with only 75 percent of normal production available. The shortfall will continue until February next year, according to an Acer official.
As we reported earlier this month, Western Digital has had to shut down its Thai plants – not as a direct result of the flooding but because component manufacturers have been hit hard by the situation. Seagate has been affected by the situation too, along with other companies such as Hitachi and Toshiba.
Thailand continues to be adversely affected by the prolonged monsoon, with some now warning that there is a real danger of disease.
Shipments in the storage market jumped in all segments for the second quarter of this year – kick-started by the tragedy in Japan, which saw manufacturers rush to stockpile inventory.
Hard disk drives, optical disk drives and solid state drives climbed 4.5 percent from the first quarter into the second, reaching 248.8 million units – up from 238.1 million. It was a year-on-year increase of 5.6 percent, from 235.5 million units shipped for the same time in 2010.
While other sectors of the technology industry had their stability threatened by the earthquake in Japan, it boosted orders and inventory up to reasonable levels, according to IHS. HDDs benefited the most, climbing 4.2 percent from 160.4 million in the first quarter up to 167.1 million units shipped.
Optical disc drives enjoyed a 4.4 percent increase up to 78.3 million units. However, revenues stagnated because prices declined. IHS also pins the blame on the transition into purely digital media, with plenty of OEMs ditching optical discs in favour of sleeker systems pioneered by Apple.
SSD shipments continued to grow. Second quarter figures were at 3.4 million units – from 2.8 million in Q1 – or a 21.4 percent growth. Cache SSDs, which are a cost-effective option to bolster system performance, are expected to grow even further over the coming years.
However, the relatively new segment will be troubled in its formatitive years, facing challenges like a very crowded set of manufacturers, as well as a strong reliance on third-party controllers and NAND. To keep SSDs sustainable, IHS believes the supplier base needs thinning out.