Seagate spins off a bit of cash from slowing disk drive business

Flash? Pa-ahh! Better to put dollars into disk

Seagate's MACH.2 dual-actuator tech will begin shipping later this calendar year, starting "around" the 20TB capacity point, the firm's CEO Dave Mosley has confirmed.

Competitor Western Digital is also developing dual-actuator technology to increase disk drive IO rates.

Seagate's tech chief made the remarks to analysts on the earnings call for the firm's fourth quarter ended June 28, where it managed to squeeze some cash from its disk drive business despite long-term revenue decline, and with little or no help from enterprise arrays and SSDs.

The spinner's reported Q4 fy2019 revenues were 5.4 per cent down annually at $2.37bn from $2.83bn. While net income was up 113 per cent from the $461m of Q4 '18, that was largely due to a one-time $702m tax benefit. Taking that away, profits would have been $281m, 39 per cent lower than a year ago.

That said, it was still better than Western Digital's latest quarter – which saw depressed revenues and a loss.

Full FY2019 revenues for Seagate were $10.4bn, 6.3 per cent less than a year ago. Net income for the year was $2bn compared to the $1.18bn recorded last year. If we take away the Q4 one-time tax benefit again, then full-year profits were $1.31bn.

Mosley said in a statement: "We continued to execute well in the June quarter in the midst of an uncertain global environment. We once again delivered on all of our financial expectations, while driving higher operating profit and earnings per share quarter-over-quarter, and demonstrating our ongoing focus on optimizing free cash flow."

He said global industry conditions were starting to improve, particularly among cloud and hyperscale customers. Seagate expects to make revenues of $2.55bn plus or minus 5 per cent in the next quarter, 14.7 per cent down on $2.99bn last year.

Spinning... down?

Looking at the past seven years, Seagate is getting smaller. Revenues have shrunk 30.4 per cent from $14.94bn in FY2012 to $10.4bn in FY2019.

The disk drive business's revenues have remained more or less flat over the 2016-2019 period.

It is now the largest disk drive manufacturer by revenues, according to figures supplied by Aaron Rakers, a senior analyst at Wells Fargo.

The company's forays into enterprise arrays and flash memory are not doing as well, with revenues trending down from $209m in the first FY2016 quarter to $167m in the latest quarter. By comparison Western Digital earned $1.5bn from flash-based products in the quarter.

Seagate: disk or die

Disks are pretty much everything for Seagate. The enterprise systems (storage arrays) and flash business represents just 7 per cent of revenues.

Western Digital has invested to become a significant integrated NAND and SSD supplier, and is now investing again to build a storage array business. Seagate by contrast is wedded to the HDD business.

We might even see the company offload its enterprise systems and flash businesses. If Seagate can do better with dollars invested in making disks rather than arrays and SSDs, it may decide to concentrate everything on disk drives and spin off the array and SSD distractions. ®

Tech Resources

The State of Application Security 2020

Forrester analyzed the state of application security in 2020 and found over 75% of external attacks are attributed to web application and software exploits.

How backup modernization changes the ransomware game

If the thrill of backing up your data and wondering if you will ever see it again has worn off, start the new year by getting rid of the lingering pain of legacy backup. Bipul Sinha, CEO of the Cloud Data Management Company, Rubrik, and Miguel Zatarain, Director of Global Infrastructure Technology at PACCAR, Fortune 500 manufacturer of trucks and Rubrik customer, are talking to the Reg’s Tim Phillips about how to eliminate the costly, slow and spotty performance of legacy backup, and how to modernize your implementation in 2021 to make your business more resilient.

Webcast Slide Deck | Three reasons you need a hybrid multicloud

Businesses need their IT teams to operate applications and data in a hybrid environment spanning on-premises private and public clouds. But this poses many challenges, such as managing complex networking, re-architecting applications for the cloud, and managing multiple infrastructure silos. There is a pressing need for a single platform that addresses these challenges - a hybrid multicloud built for the digital innovation era. Just this Regcast to find out: Why hybrid multicloud is the ideal path to accelerate cloud migration.

Anatomy of a Private Cloud

Learn the key elements that combined, build a true Private Cloud

Biting the hand that feeds IT © 1998–2021