Western Digital hit with $525m damages in Seagate case

DISK DRIVE MAKER Western Digital has been ordered to pay $525m by an arbitrator regarding claims made by rival storage outfit Seagate.

Seagate alleged that Western Digital and one of Seagate's former employees had misappropriated confidential information and trade secrets. The arbitrator in the case rendered the award of $525m against Western Digital, an assessment that Western Digital claims lacks any basis in law.

John Coyne, president and CEO of Western Digital said, "We do not believe there is any basis in law or fact for the damage award of the arbitrator." Coyne continued, "We believe the company acted properly at all times and we will vigorously challenge the award. This does not affect our ability to conduct our operations, to complete the recovery and recommencement of our Thailand operations or, subject to obtaining the required regulatory approvals, to consummate our planned acquisition of Hitachi GST."

Western Digital and Seagate recently announced that they will buy Hitachi GST and Samsung's hard drive operations, respectively. The moves will see the two firms duking it out, with Toshiba a very distant third place.

The fact that Coyne mentioned the Hitachi GST merger shows how important it is for the firm to complete the deal. If it falls through and Seagate completes its purchase of Samsung's hard drive division, Western Digital might be left at a disadvantage for competing with Seagate.

At present the hard disk drive industry has been reeling from the devastating floods in Thailand. With suppliers being forced to shutter factories, disk drive prices have increased sharply, though in recent days some models have started to slowly come down in price. µ