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High HDD Prices Result in Record Sales at Seagate

By - Source: Seagate | B 54 comments

Hard drive manufacturing is apparently exceeding pre-Thailand flood levels and companies such as Seagate are now reaping the benefits from increased HDD pricing.

The company said it expects to report record sales of about $4.5 billion for the second calendar quarter (fiscal Q4) of this year, based on shipments of 66 million drives and aggregate storage volume of 45 exabytes.

In comparison, Seagate shipped reported $4.4 billion revenue for the previous quarter (calendar Q1 2012), 61 million sold drives and 42 exabytes of storage. Compared to last year, Seagate shipped 52 million drives and 33 exabytes in the second calendar quarter of 2011 (prior to the Thailand flood, which happened in October 2011).

On a year-to-year basis, Seagate says it has seen a 21 percent increase in HDD shipments for the second quarter. Revenue climbed in the same timeframe by 34 percent and non-GAAP gross margin almost doubled from 18.8 percent to 33.6 percent

Still, Seagate did not reach its original forecast. "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," said CEO Steve Luczo in a statement. "Second, 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."

Seagate previously expected revenues of about $5 billion and non-GAAP gross margin of at least 34.5 percent.

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Top Comments
  • 25 Hide
    daglesj , July 8, 2012 1:10 PM
    May I just say since the unnecessary and profiteering price hikes last year, I haven't bought one single HDD from the likes of Seagate and WD.

    I have been buying SSDs for myself and customers since. They love them.

  • 22 Hide
    DRosencraft , July 8, 2012 2:23 PM
    It should be noted that it was WD whose plants were hard hit by the floods, not Seagate or the others. WD was the one that had a relatively high concentration of plants in that area. Seagate's claim at the time, which is partly backed up by these numbers, is that demand on their side went up since WD could no longer fill the aggregate volume for HDDs. This is where the whole price-fixing conspiracy theory comes from. WD raised prices after the floods because they lost manufacturing capacity and needed to dissuade high volume purchasing just so they wouldn't themselves run out. Seagate, who lost little to no manufacturing capacity, raised prices to also dissuade high volume purchasing as they tried to fill in the slack left by WD. They ramped up their own production to take advantage.

    At this point you wont see Seagate's prices drop until WD's prices drop. It actually makes a lot of sense for us as consumers to endure it this way. The alternative is that Seagate drops it prices to where they probably should be, and WD dies as a company from being unable to match Seagate's price. Don't pay too much attention to Seagate's numbers. Look at the overall total quarterly shipments of HDDs, and the average price. But, no one is probably going to listen to me, or do the investigating themselves, so I'll probably get down voted to oblivion for "defending" Seagate ad WD. Oh well.
  • 21 Hide
    nforce4max , July 8, 2012 1:05 PM
    It would be nice if prices dropped further than they have from last year's highs.
Other Comments
  • 21 Hide
    nforce4max , July 8, 2012 1:05 PM
    It would be nice if prices dropped further than they have from last year's highs.
  • 25 Hide
    daglesj , July 8, 2012 1:10 PM
    May I just say since the unnecessary and profiteering price hikes last year, I haven't bought one single HDD from the likes of Seagate and WD.

    I have been buying SSDs for myself and customers since. They love them.

  • 20 Hide
    maqsabre , July 8, 2012 1:15 PM
    i guess, creating artificial scarcity works
  • 21 Hide
    joex444 , July 8, 2012 1:30 PM
    If a flood wipes out your manufacturing plants, how do you ship more than before the flood? According to this business theory, floods for everyone!

    Another example of how unemployment is still sky high because companies are saying they can't afford to hire people. Yet they report record profits, which I think is the definition of being "able to hire."
  • 17 Hide
    outlw6669 , July 8, 2012 1:55 PM
    How about dumping some of your record profits to increase your 4TB drive production?
  • 4 Hide
    Drayeon , July 8, 2012 2:22 PM
    If the flood disrupted 50% of their usual shipments from last year. That would mean that this year they would have to ship 150% of the normal rate from 2 years ago to keep up with amount that they would have sold. Which is why they can ship more while prices are still high.

    And to the people saying theres no regulation. Try starting a bussiness. Once you see the thousands of pages of stupid regulations it will make you want to throw up. Congress and all their hundreds of organizations pass hundreds of laws daily regulating more. Enough to fill 3 semi trucks of paper a year.

    Democrating Senator George Mcgovern was famously quoted when he tried to start a business in Connecticut as saying If I had known how hard it was to start a business due to the amount of regulations I would have worked to get rid of them while in office instead of making them.

    Just because you hear someone took one page of regulations off the book at some point doesn't mean that congress isn't putting out several hundred pages a day to make up for it.
  • 22 Hide
    DRosencraft , July 8, 2012 2:23 PM
    It should be noted that it was WD whose plants were hard hit by the floods, not Seagate or the others. WD was the one that had a relatively high concentration of plants in that area. Seagate's claim at the time, which is partly backed up by these numbers, is that demand on their side went up since WD could no longer fill the aggregate volume for HDDs. This is where the whole price-fixing conspiracy theory comes from. WD raised prices after the floods because they lost manufacturing capacity and needed to dissuade high volume purchasing just so they wouldn't themselves run out. Seagate, who lost little to no manufacturing capacity, raised prices to also dissuade high volume purchasing as they tried to fill in the slack left by WD. They ramped up their own production to take advantage.

    At this point you wont see Seagate's prices drop until WD's prices drop. It actually makes a lot of sense for us as consumers to endure it this way. The alternative is that Seagate drops it prices to where they probably should be, and WD dies as a company from being unable to match Seagate's price. Don't pay too much attention to Seagate's numbers. Look at the overall total quarterly shipments of HDDs, and the average price. But, no one is probably going to listen to me, or do the investigating themselves, so I'll probably get down voted to oblivion for "defending" Seagate ad WD. Oh well.
  • 20 Hide
    NuclearShadow , July 8, 2012 2:29 PM
    I haven't bought a single HDD since the price hikes occurred and I have been needing another one for sometime now. I have the money but I refuse to pay at such a hike in prices. Now that I have seen this I am glad that I have not, records profits at these current prices will only encourage the price to stay up.
  • 17 Hide
    garrick , July 8, 2012 2:35 PM
    It was Thailand not Taiwan...
  • 2 Hide
    JohnUSA , July 8, 2012 2:35 PM
    Seagate s cheating us all with phony shortages.
    May this evil company go to hell and burn for eternity.
  • 11 Hide
    jojesa , July 8, 2012 2:35 PM
    maqsabrei guess, creating artificial scarcity works

    Companies have been doing that for years and it always work.
    Bread, flour derivatives = blame the drought in Eastern Europe
    Cheese, milk derivatives = blame the drought in west USA
    Gasoline, petroleum derivatives = blame uncertainties in the Middle East.
    But we do not see the prices going down to the time before the problem started.
    Look at the barrel of crude went all the way down ($85) as it was before, but the prices at the pump went down just a bit to shut us off.
    Seagate and WD are just the latest culprits of this type of scheme. Bastards!!
  • 3 Hide
    Drayeon , July 8, 2012 2:40 PM
    Seagate did get the number of HDD's they could produce by the floods. While the factories that Seagate owns that put them together did not get hit. The parts suppliers that Seagate uses to build the drives did. That would be like if you are putting together a computer for a friend but, can't find any parts to make it and your friend tells you "Well the house you use to put the computer together didn't get flooded."
  • 6 Hide
    chibiwings , July 8, 2012 2:40 PM
    how about SSD price drop and Market share growth? we all know that this HDD manufacturers are make a cash cow on all of us
  • 3 Hide
    tomfreak , July 8, 2012 3:28 PM
    the HDD price has to be cheaper than pre-flood levels or I am not going to buy another HDD for another 5-7yrs+ or may be not anymore since by 5yrs SSD will probably cheap enough.

    Seagate is on the other hand by exploiting this is not going to take my money for good. Unless WD are failing hard.
  • 8 Hide
    txsouthpaw , July 8, 2012 4:18 PM
    @greghome^^^
    I agree 100%. Ever since the days of Reagan and Thatcher, the market has not been free. Instead, we live in a supply side welfare system in which all gains are privatized and all risks are socialized. This type of wealth concentration and disregard for the demand side of capitalism has been seen before: the 1890's and 1920s. The Hayek inspired neoclassical school of economics needs to be thrown in the dumpster of history where it belongs. I despise even mentioning that fool's name, as his policies and champions thereof are responsible for the suffering of billions of people.
  • 8 Hide
    teodoreh , July 8, 2012 4:45 PM
    Last years Thailand floods was absolutely the best thing that could happen on Seagate and WD before they run out of business. It allowed them to:

    (i) Raise up to 200% prices on certain retail segment (prices on large preorders remained pretty much the same and that's why u get cheap external HDDs or laptops)

    (ii) To reduce at the same time (what a scandal) their warranty from 2-3y to 1y.

    (iii) To demand pre-orders on higher prices for a year (so as the prices not to "collapse").

    And what was the result of all of these things? PROFIT of course!

    I hope they will spend this money wisely. Because soon SSDs will convert them to the next IT dinosaur. Yesterday I saw a 256GB OCZ at €160 or something. Considering that I bought my 128GB HyperX at around 260€ last year, this shows that we are definitely on a turning point here!
  • 1 Hide
    elbert , July 8, 2012 5:14 PM
    They better use this money in R&D. Soon if they cant deliver 8TB HD's they will start seeing loses do to faster SSD's with much larger capacity. Possible a new optical drive could replace them for high end storage in the near future.
  • 1 Hide
    pharoahhalfdead , July 8, 2012 5:34 PM
    daglesjMay I just say since the unnecessary and profiteering price hikes last year, I haven't bought one single HDD from the likes of Seagate and WD.I have been buying SSDs for myself and customers since. They love them.


    I used to buy all WD, three generations of Raptors, and was considering getting the newest 1TB, but since the prices pf SSD's have dropped so much I've bought two myself.
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