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Seagate sees profits fall as hard drive prices hit pre-flood levels

The days of profiteering are over
Tue Jan 29 2013, 11:47
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STORAGE VENDOR Seagate announced that its fiscal second quarter profits fell by 12 percent to $492m as hard drive prices fell back to levels before the 2011 floods in Thailand.

Seagate had been riding high as rival storage vendors Western Digital and Toshiba were hit by the devastating floods in Thailand, however its latest results show that as hard drive prices return to pre-flood levels, the firm's bottom line is taking a hit.

Seagate announced that while its second quarter revenues increased by 14 percent to $3.66bn, the firm's profits fell by 12 percent to $492m compared to the same period a year previously.

Although Seagate's controversial move to cut hard drive warranties means that its warranty liabilities continue to fall, the firm is burning through its cash, which now stands at $1.38bn, down $324m from just three months previously.

Seagate chairman and CEO Steve Luczo said, "Seagate is executing well in an environment where customer demand forecasting is challenging.

"Looking ahead, we will continue to manage our business conservatively to the demand environment, focus on profitability and effectively invest for market leadership in storage for mobility, cloud and open source.

"Creating value for shareholders remains a top priority, and in the first half of fiscal 2013, we returned over 95 [percent] of operating cash flows through share redemptions and dividends."

Seagate and its data storage rivals have been making hay over the past year, however Seagate's latest financial results suggest that the hard drive industry is moving back to its low-margin nature, despite the number of players dwindling. µ


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