For the bottom line, Seagate said only that GAAP and non-GAAP gross margins did not achieve the company’s expectations.
Among the problems during the fiscal quarter, which ended on March 30 2007 were disappointing demand for 3.5in ATA drives, and unexpected levels of price competition for high capacity ATA drives of the same size. 3.5in drives are used in both desktop computers and standalone disk arrays.
Seagate said that it believes its market share did not change during the quarter, and said that its channel inventories cover less than five weeks of business, so no overstock of inventory has built up.
Operating in an industry sector with very tight margins, Seagate said that the last time it missed its guidance was exactly three years ago.
Only two weeks ago Seagate’s biggest rival, Hitachi GST unveiled a cost-cutting plan that will see the company lay off around 11% of its employees and contractors, and close a factory in Mexico. That move followed widening losses for the GST division of Hitachi.
