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This Storage Player Looks Like a Weak Long-Term Bet

August 21, 2014 | About:
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Information storage player Seagate Technology (STX) is facing trouble this year. The organization is confronting intense rivalry from opponent Western Digital (WDC). The revenue and profit of Seagate went down in the last quarter so the organization's shares have gotten destroyed in 2014.

Seagate's prospects are not appealing at this point. The company is seeing slow sales of disk drives with higher margins to enterprise customers. Also, it is acquiring higher operating expenses. Further, the sluggishness in sales for the PC business sector is an alternate sympathy toward the organization's hard-drive business. Let's see if the organization stock is worth investing in as of now or not.

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Seagate is wanting to investigate different areas to make up for a powerless PC market. Thus, the organization is focusing on products for cell phones and servers. Further, Seagate is focusing on strategic acquisitions. That appeared to be the strategy by gaining Xyratex, which is a leading supplier of storage information engineering. The acquisition upgraded Seagate's vertically incorporated supply and assembling chain for disk drives. Further, the acquisition enables Seagate to extend its portfolio through Xyratex's industry-leading enterprise information storage systems and elite registering businesses.

Seagate is also restructuring its item portfolio to adjust its offerings to the rising trends in versatility, cloud and open source figuring. The organization has presented its Kinetic stage and is creating its arrangement of high limit drives with a 6-disk, 6-terabyte drive. Going ahead, these moves are required to strengthen its position as Seagate expects its addressable business to develop,.

Seagate's moves are looking to be powerful as of now. The increasing footing for 5-millimeter drives in versatile being sold by different tablet manufacturers is empowering Seagate to see great response in the portable segment. Seagate is also focusing on item advancement. Seagate's latest shingled attractive recording, or SMR, engineering is relied upon to break density barriers in hard drives and add 25% more ability to conventional drives. This could empower Seagate to win over more customers in the server and enterprise advertise because of the ease of storage and with the presentation of higher-limit hard drives.

Going ahead, Seagate is peering toward on to extend customer engagement by giving them more services. In addition, the increasing interest for vast limit drives is empowering Seagate to increase the value of its item portfolio and win more customers in enterprise data innovation functions.

Western Digital ahead of the pack

Seagate's opponent, Western Digital, is as of now in front of it in the enterprise storage office. Western Digital has stretched its enterprise segment. It has achieved this by acquisitions that are worth close to $1 billion for Virident and stec. The organization shed cash on these acquisitions last year, and the good news that the two companies are now powering its growth.

All the more vitally, the administration announced that Western Digital's enterprise revenue was better than the industry's normal in the last quarter. Several successful acquisitions by Western Digital have provided for it a stronger base than Seagate to tap this business sector.

Last words

Seagate is struggling against its opponent HDD creator Western Digital which has been picking up share. Prior both companies used to summon an indistinguishable share of the business sector; however, Western Digital has continued with a 45% share as contrasted with Seagate's 40%. Also, Western Digital is in a much healthier cash position as contrasted with Seagate, which should permit it more noteworthy opportunity to make more acquisitions and increase item improvement.

So, Seagate could keep on losing in the storage market, and consequently, the investors should stay far from it.


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