Seagate warned yesterday that it now expects revenues for the current quarter to be in the range of $2.3 to $2.6 billion, which is about $500 million off previous projections, communicated just a little over a month ago.
The world’s largest disk drive maker also confirmed our earlier report that it is in a midst of a major restructuring analysis to slash production capacity and its workforce – rumored to be up to 20% – as well as impose a company-wide mandatory holiday shutdown.
“We can make money at $3 billion a quarter. We can even make money at $2 billion. But we can not make money If I think it’s $3 billion and it ends up only $2 billion,” admits Watkins.
In a meeting with financial analysts in San Francisco, Seagate CEO Bill Watkins said that sales were “decent” up until the second week of November when demand suddenly “pullback”; affecting sales in retail, enterprises and PC manufacturers or OEMs.
A deteriorating situation that quickly resulted in a price war among hard drive makers including Western Digital, Samsung, Fujitsu, Hitachi and Toshiba.
“We didn’t want to try to make this quarter. We decided we need to pull back, get pricing under control and focus on the long term opportunity,” adds Watkins.
Other comments from Seagate’s CEO on his views of the troubled disk drive market:
We made deals that were not making financial sense, that were screwing up the next quarter.
We have to be disciplined and walk away from bad deals.
Asia is the strongest market by far, the U.S. the weakest and Europe is in the middle but falling rapidly too.
Russia, Ukraine, Brazil and Korea (melt down) were the other geographical areas that were hit hard mainly because of the credit crunch
