Seagate Technologies (NASDAQ: STX) reported their financial results for the quarter ending September 29th, 2017. Seagate is largely known for manufacturing HDDs and external hard drives, a sector that has seen a decline over the last few years in part due to decreased pricing and availability of SSDs. Flash-based memory prices are high right now, but are overall significantly lower than when the technology was being introduced to the mainstream market.
For Q1 2018, Seagate reported revenue of $2.6 Billion, gross margin was reported at 28.0%, and net income was listed at $181 Million with diluted earnings per share of $0.62. For reference, last year’s financial results in Q1 2017, Seagate showed revenue of $2.8 Billion, gross margin of 28.6%, net income of $167 Million, and diluted earnings per share of $0.55.
As solid-state storage continues to displace mechanical drives, so too does the constriction of the HDD market continue. As part of their ongoing plan to stay profitable and financially stable, Seagate has opted to shut down its HDD manufacturing facility in Suzhou, China. The Suzhou plant was one of Seagate’s largest production assets, and its resultant closure will acutely reduce the company’s HDD output.
However, this isn’t unforeseen, as last year Seagate announced its intentions to augment manufacturing capacities from around 55-60 million drives per quarter to approximately 35-40 million drives per quarter in accordance with their continued restructuring initiative. As part of that effort, Seagate reduced global employee headcount by 8,000 last year. Moreover, the closing of the Suzhou facility will see the layoff of a further ~2,200 employees.
Seagate's year started off with a declaration of significant downturn in its revenue and profits, and the company now faces additional challenges from a Class Action consumer complaint. The complaint has been levied against the company for “breach of consumer protection, unfair competition and false advertising […] and unjust enrichment,” something which law firm Hagens Berman contests should yield rewards for affected consumers.
It seems that every time we hear from Seagate, it's about an advancement in density (capacity per square-inch) for hard disk drives. The meteoric rise of solid-state drives has certainly created a market split for consumers – “mainstream” notebook users may never again need magnetic storage internally – but media professionals and gamers generally still rely upon an HDD for archiving. Seagate's newest push has been in the helium-filled drive space and has been a continued effort for a few years now.
With the hard drive storage market slimmed-down to just a few major players – Hitachi now owned by WD – the market has felt relatively stagnant for the past year. Seagate recently announced that its SMR 8TB HDD, branded as an “archive HDD,” will soon be available for $260.
“I'm not dead yet!” may be an appropriately pulled quote in the instance of mechanical hard drives. Despite the SSD revolution (SSDs explained here), there's still a place in the world for magnetic storage – and it will likely remain that way for a long, long time; after all, we're still using tape drives in some industry sectors.
Seagate announced today that they have managed to achieve new feats of storage capacity. Seagate is the first company to get an 8TB 3.5” HDD to the consumer market, according to Seagate Vice President of Marketing Scott Horn. This comes only a few months after the company released its 6TB HDD and hopefully means they may be creating even larger HDDs as they are learning more about achieving high density storage in the restrictive space, but that’s probably overly optimistic speculation on my side.
PC components have frighteningly high failure and DOA rates when compared against other industries, but perhaps one of the least reliable components - and worst to lose - is the hard drive. While talking with a representative from the audio industry at CES, the point was made that "you only need to have the device fail one time before you decide to never buy from that company again." That's generally true, and is generally why we opt for WD or
Online backup provider Backblaze ran an internal reliability study on 25,000 hard drives and statistically analyzed the endurance of devices from each major company: Seagate, WD, and
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