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Seagate cuts revenue forecast despite record unit sales

SSDs come knocking
Fri Jul 06 2012, 15:20
Seagate Savvio 15K

HARD DISK VENDOR Seagate said it expects to report record revenues as prices remain high in the wake of last year's floods in Thailand.

Seagate, which has bought Samsung's hard drive business, said it expects to report revenues of $4.5bn in its fourth fiscal quarter of 2012, but even though prices have remained high the latest forecast is $500m lower than before. The firm said it still expects to ship a record 66m units, with 42 per cent market share during its fourth quarter.

Steve Luczo, chairman and CEO of Seagate and the man who graciously hiked prices by 'only' 20 per cent while Western Digital suffered, blamed the lower forecast on the industry's quick recovery, saying, "The June quarter's shortfall was due primarily to two factors. First, we did not achieve our planned market share growth as we reduced shipments in response to the industry's faster than expected recovery from their supply chain disruption."

Luczo also apportioned blame to a supplier, saying, "We experienced an isolated supplier quality issue that affected one of our enterprise product lines. This product issue impacted enterprise product unit shipments by approximately 1.5 million units and drove our non-GAAP gross margin below our targeted plan. While this disruption to our business was disappointing, we acted quickly and conservatively by suspending shipments of the affected products. We have resolved the issue and have resumed fulfilling our supply commitments to customers."

Luczo didn't mention anything about the popularity of solid-state disk (SSD) drives increasing as prices drop and Intel's ultrabook campaign gains momentum. However if Seagate has had continual supply chain issues to deal with alongside the onslaught from SSDs, then things are not looking particularly rosy for the firm.

Seagate will release its fourth quarter financial results on 30 July. µ


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