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Can Seagate Come Out of Its Slump in the Long Run?

August 19, 2014 | About:
rsconsultant

rsconsultant

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The PC market has been harsh for hard-drive makers such as Seagate Technology (STX) and Western Digital (WDC). Hence, both companies have been attempting to diversify into the cloud, server farms and mobile devices to discover new revenue opportunities. This transition, notwithstanding, hasn't ended up being easy. At the point when Seagate released its final quarter results, it posted yet an alternate year-over-year decline in revenue and earnings.

Seagate has also lost a piece of the pie to adversary Western Digital in the storage industry, and this has added to its troubles. Notwithstanding, Seagate figured out how to satisfy consensus estimates when it released results, and its viewpoint was standard with expectations. The organization has been making moves to enhance its long-haul prospects through its new product offerings and technology, and it seems to be making great progress.

Cloud is the place where the development is

Seagate has assembled an arrangement of distributed storage solutions – Onestor systems, Clusterstor and Evolve. The great thing is that the organization saw great need in this segment in the previous quarter, with revenue surpassing its interior target. Seagate singled out Clusterstor, its superior figuring business, as the outstanding performer with 210% revenue development in the previous quarter.

Clusterstor is picking up footing in the oil and gas and social insurance verticals, alongside the legislative sector for enormous information sending. Truth be told, two of the Fortune Five oil and gas corporations are using this Seagate item in investigation and geospatial analytics. The organization claims to have furnished Clusterstor with the world's fastest information analytics motor, which has empowered it to discover selection in information intensive applications.

In the meantime, the Evolve product offering turned in a solid performance, arriving five deals over a large portion of million-dollar-mark. Looking ahead, Seagate expects revenue from this item to increase further, driven by a higher normal selling cost and stronger request.

Two key acquisitions

Seagate made a smart move not long ago by securing Xyratex, and it seems to be harvesting the benefits now. The acquisition has permitted it to bolster its superior registering business and increase more expertise in cloud-based storage technology.

Presently, Seagate is very nearly closing an alternate acquisition. The organization reported in May that it will gain Avago Technologies' SSD controller and Pcie assets. This is an alternate decent move as the solid-state drive (SSD) industry is developing at a fast pace. As indicated by IHS isuppli, worldwide SSD shipments are relied upon to increase to 227 million units in 2017 in PCs, from just 31 million units in 2012. SSDs will wind up representing a third of the storage advertise by 2017 so it is critical for Seagate to keep building its technology portfolio in this product offering.

Better PC prospects

The organization also expects better results in the second half of the year. Indeed, Seagate is seeing one of its best request trends in four years, with July effectively being better than typical. The organization is depending on strength in the notepad market, driven by item refreshes. This isn't surprising, as chip goliath Intel said the same recently.

Intel increased its revenue expectations with the conviction that the worst is over for the PC industry. The organization now expects its revenue to develop 5% this fiscal year, a solid change over the prior forecast of level sales.

Being a hard-drive supplier, Seagate's prospects are straightforwardly fixed to the PC industry, so Intel's editorial is uplifting news for the organization. Also, Seagate has arranged another line of products to tap the PC market. For instance, its 7200 RPM journal item has picked up capability at all real unique gear manufacturers, and a generation slope is headed. Shipments of Seagate crossover drives are also enhancing, with the top three worldwide PC makers offering it in their primary product offerings.

Conclusion

Seagate's late results show that the organization is on track to improve. Its investments in the cloud and the increasing appropriation of its products by customers should result in long haul improvements.


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