Read-Rite Corp is celebrating a volume order from Quantum Corp’s Hard Disk Drive Group, which will take GMR giant magnetoresistive head gimbal assemblies (HGAs) for its new Fireball lct low cost disk drives. It’s the first volume order Read-Rite has seen from Quantum in two years. The HGAs come at an areal density of 6.2 gigabits per square inch, or 8.7 gigabytes per 3.5 inch disk. Read-Rite is currently ramping up production, and expects to begin initial shipments next month.
Milpitas, California-based Read-Rite admits that, in the words of chairman and CEO Cyril Yansouni, that the disk drive industry environment remains extremely challenging for Read-Rite in the short-term. But, says Yansouni, we are encouraged by our progress on GMR technology and our expanding customer base. He says Read-Rite and Quantum are working on numerous desktop and enterprise programs.
Read-Rite’s shares dropped dramatically earlier this month after the company warned that it would be in violation of its $150m credit facility by the end of its fiscal year. The company said it didn’t anticipate defaulting on loan payments, and said it was working to renegotiate its lending agreements.
Last quarter, Read-Rite posted a net loss of $57.3m (including a restructuring charge of $22.1m and a one-time tax gain of $25.9m) on sales of $174.8m, which have been declining sequentially. Shipments of heads declined 16% from the previous quarter. In April, the company announced it would be cutting 2,500 jobs, or 14% of its workforce. Read-Rite has already warned that it expects to see a further decline in sequential sales and a loss for the quarter, which ends September 26. The results are expected to be reported on October 20.
