[copperpress-advertserve-ad-reload zone="3"]
 June 1, 1999

Seagate recoups lost revenue with faster-to-market products

LONGMONT — Despite being the world’s leading producer of disk drives and magnetic disks, Seagate Technology found itself swimming in red ink during the 1997-1998 fiscal year. After tax write-offs, Seagate posted a revenue loss from 1997 of about $500 million.

Seagate’s 1998 revenues fell to $6.18 billion from $8.9 billion in 1997, nearly a 24 percent decrease. The percentage drop placed Seagate, which employs some 600 workers in Longmont, atop the list of Boulder County public companies with the lowest revenue growth last year.

“Fiscally, 1998 was a tough year, not just for Seagate, but the entire industry,´ said Woody Monroy, Seagate’s senior director of corporate communications. “That’s almost a year ago,” Monroy said. “We’ve now got close to $2 billion in cash, and almost doubled gross margins.”

Founded in 1979, the Scotts Valley, Calif.-based Seagate employs 85,000 people worldwide. At the core of Seagate’s storage products are a broad range of disc drives, in 3.5-inch and 5.25-inch format that have capacities ranging from 2 gigabytes to 50 gigabytes.

Seagate began a turnaround in profits in its fiscal fourth quarter ended July 2, 1998, which is the same time that Steven Luczo stepped in as the companies president and chief executive. Luczo attributed most of the company’s drop in sales on focusing more on bringing cheaper products to market.

“Time to market is what’s important, and we had to focus on technology leadership rather than cost,” he told the Investor’s Business Daily in an April interview.

“(Before) we were able to come in second or third to market at lower costs, but overall we were slow to act,” Monroy explained. “The emphasis in the market shifted from cost to first to market, and Seagate was known as bringing the cheapest product to the market. And that hurt.”

Luczo reshaped Seagate’s management 70 percent, changed the company’s business model to emphasize on “time to market leadership (implemented) through cross-functional teams,” and invested heavily in research and development.

Another change taking place at Seagate is the way it will do business with distributors in North America. Beginning in April, the company stopped selling products for reselling purposes and took control of its own inventory. From now on, Seagate plans to sell on a consignment basis in order to limit the number of people it does business with.

In March, Seagate also announced a one-time restructuring charge estimated at between $50 million-$60 million to worldwide operations that included the closure of its microelectronics manufacturing facility in Livingston, Scotland, consolidation of global customer service facilities and other actions taken to increase productivity.

On Seagate’s operations locally, Monroy said, “Longmont has done a lot for our overall operations.” He also noted that Longmont became one of the sites for Seagate’s Storage Products Group Advanced Concepts Labs that support desktop disc-drive research and development along with facilities in Moorpark, Calif., and Singapore.

“We are currently way ahead of the product competition and that has come directly out of Longmont and Singapore,” he added.

At press time, Seagate officials said the next generation product would be announced at the end of May.”We’ll be there either first or second and that’s a big improvement,” Monroy said.

LONGMONT — Despite being the world’s leading producer of disk drives and magnetic disks, Seagate Technology found itself swimming in red ink during the 1997-1998 fiscal year. After tax write-offs, Seagate posted a revenue loss from 1997 of about $500 million.

Seagate’s 1998 revenues fell to $6.18 billion from $8.9 billion in 1997, nearly a 24 percent decrease. The percentage drop placed Seagate, which employs some 600 workers in Longmont, atop the list of Boulder County public companies with the lowest revenue growth last year.

“Fiscally, 1998 was a…

[copperpress-advertserve-ad-reload zone="3"]

Related Content

[copperpress-advertserve-ad-interstitial zone="30"]