SAN FRANCISCO—Disk drive maker Seagate Technology plc Monday (Nov. 28) said it expects revenue for the quarter ending in December to be above consensus analysts' expectations, but warned that the recent flooding in Thailand will lead to a shortage of hard disk drives (HDDs) that will last several quarters.
Seagate (Cupertino, Calif.) said its component and disk drive factories in Thailand have not been affected by the flooding, but that the company's ability to manufacture HDDs has been hurt by component supply constraints caused by the flooding.
Seagate, the world's No. 2 supplier of HDDs, said it expects total industry-wide HDD shipments for the calendar fourth quarter will be between 110 million and 120 million units. By contrast, the industry shipped 167.5 million HDDs in the fourth quarter of 2010, according to market research firm IHS iSuppli.
Last week, Hewlett-Packard Co. executives said plant closures and other issues created by the flooding in Thailand would impact the supply of HDDs into the second quarter of next year.
"I've been on phone with the heads of our four disk-drive partners, and I'm not sure even they have a clear picture of when they will be fully up and running," Meg Whitman, HP's CEO, said in a conference call with analysts following the company's quarterly report.
Seagate said Monday it believes the industry's ability to manufacture and ship HDDs will gradually improve throughout 2012. The firm said it expects some companies to optimize unit shipments by manufacturing lower capacity HDDs, only modestly offsetting the growing petabyte shortage. Because demand is estimated to significantly exceed supply during this time, pricing is expected to remain stable, Seagate said.
For the fiscal quarter ending in December, Seagate said it expects to ship about 43 million HDDs and report sales of about $2.8 billion. Analysts had previously pegged Seagate's revenue for the quarter at about $2.64 billion, according to Yahoo Finance.
Seagate said it continues to expect its acquisition of Samsung Electronics Co. Ltd.'s HDD business to close by the end of December.
For the following quarter, which closes in March 2012, Seagate said it expects unit shipments to increase sequentially and sales to climb to at least $3.75 billion, partly due to the Samsung HDD acquisition. Consensus analysts' expectations had pegged Seagate's sales for that quarter at about $3.24 billion, according to Yahoo Finance.
Earlier this month, Jan Vardaman, president of research and consulting firm TechSearch International, speculated that the impact on the electronics supply chain from the Thai floods could be worse than the impact of the disruptions spawned by the March 11 earthquake off the coast of Japan.
Major flooding in Thailand, which began in late July, has killed more than 600 people and forced the closure of a number of industrial manufacturing facilities, including several HDD factories and semiconductor test and assembly facilities.
SSD prices don't have to match hard drives, the premium just has to narrow. Already OEM drives at Fry's are notably more expensive. As ultrabooks drive up SSD volumes their prices will come down. If the differential is 2X or less instead of 10X it's almost a no-brainer.
Last week when I called Dell for computer support on a misbehaving computer, I was told that the severe HDD disk shortages mean that HDD replacements for repair require positive confirmation of failure before they can be authorized. Strong suspicion of a problem is no longer adequate. This means intermittent (non-reproducible) failures will take longer to resolve than they did before.
i do not think that the prices of HDD will increase in this scarce market that much that they will be comparable to SSD. As far as the laptop/desktop prices are concerned then companies usually put order in advance so apart from the delay i do not see much.
I wonder what the effect will be on laptops/desktop computers if the shortage (or reduction) in HDDs starts to impact costs for the units in the short term? Will this aid the fledgling SSD industry by making them more cost competitive (both through increased volume and relative HDD prices)? Interesting times, we will have to wait and see what long and short term effects will be felt.
Of course Seagate has an incentive to push for this scarcity so that vendors can be pressured and put orders. I do not think it is that bad. But if they hmmmer it that way, it will be good business for Seagate
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