Storage Toolkit

Seagate shrinks results forecast

Colin Barker ZDNet.co.uk

Published: 11 Apr 2007 14:49 BST

Seagate, the hard-disk-drive supplier, has downgraded its results forecast, blaming falling demand for 3.5-inch disk drives.

Predicted earnings for the company's third quarter, which ended on 30 March, are now expected to be approximately $2.8bn, compared to a previous estimate of $2.9bn to $3bn.

According to the company, the primary factors hitting revenue and profitability "were lower-than-expected industry demand for 3.5-inch ATA drives" and "a more aggressive than planned pricing environment for high-capacity 3.5-inch ATA drives".

The company had been gambling on the market for 3.5-inch drives remaining buoyant while the market for 2.5-inch and smaller drives continued to grow very quickly.

Seagate says it is still running to tight production and is not suffering from ballooning inventory — which remains "under five weeks". What is happening is probably a blip in the market, although the company does not specifically state that.

The market for higher-capacity drives is currently dominated by 500GB drives while the world waits for mass market 1TB drives to arrive.

In January, Hitachi Global Storage Technologies, a rival of Seagate, announced a one terabyte 3.5-inch drive that will be in production soon. Seagate is expected to launch its response within the next three months.

Seagate's quarterly results announcement is due on 17 April.