Trouble at Seagate?

[stevech]

Something's amiss at Seagate (symbol STX) - on how the company's being managed.
Some blame the impact of faster than expected adoption of lower priced SSDs.

prior 12 months, STX is down 24% vs. the NASDAQ index being up 5%. And WD is up over 80% and they've stayed out of SSDs so far after a very brief adventure early on.
STX's dividend is still good at 5% but total return, due to the share price fall, is not good.

These pressures often show up as reduced R&D, write-downs of bad acquisitions, and shortcuts in quality.

Or not.

 

[L&LD]

Something has been amiss at Seagate for years, imo. Worst HDD's ever.

Seagate branded ssd's? Wouldn't touch them if they were given to me for free.

 

[stevech]

Oops. Sorry for the typo in thread title. Can't find how to edit/change that.

 

[AdvHomeServer]

Something's amiss at Seagate (symbol STX) - on how the company's being managed.
Some blame the impact of faster than expected adoption of lower priced SSDs.

prior 12 months, STX is down 24% vs. the NASDAQ index being up 5%. And WD is up over 80% and they've stayed out of SSDs so far after a very brief adventure early on.
STX's dividend is still good at 5% but total return, due to the share price fall, is not good.

These pressures often show up as reduced R&D, write-downs of bad acquisitions, and shortcuts in quality.

Or not.

The stock price is a reflection of profits, financial engineering on the part of management, or both. You have to read the financial statements for the former and see if stock buybacks are involved for the latter. The stock market that exists today bears little relationship with the stock market of yesteryear, although profits still matter. The first place to look is the financial statement.

Edit: Just looked at STX. Why did it jump so much after Sept, 2011? Did they do something good or did they go up because everyone else was, as if in a bubble? I don't know but that's the question to answer.

 

[RMerlin]

Something's amiss at Seagate (symbol STX) - on how the company's being managed.
Some blame the impact of faster than expected adoption of lower priced SSDs.

prior 12 months, STX is down 24% vs. the NASDAQ index being up 5%. And WD is up over 80% and they've stayed out of SSDs so far after a very brief adventure early on.
STX's dividend is still good at 5% but total return, due to the share price fall, is not good.

These pressures often show up as reduced R&D, write-downs of bad acquisitions, and shortcuts in quality.

Or not.

I've given up understanding how investors think (or if they even actually do think, or just go with "guts feeling"). Look for example at companies like Google or Apple, who can announce a record quarter, yet because they missed the expectations of the market, will still see their share DROP after the announcement.

Sure, Seagate got a bad rep for lack of reliability in various models. And the Gen 3 Sandforce products are once again delayed until 2016, and have less than impressive specs (they would be competitive if they had been released in Q2 2015 - by 2016 they will be average at best). But I bet that investors don't even know that fact. So it has to be something else.

 

[stevech]

I've given up understanding how investors think (or if they even actually do think, or just go with "guts feeling"). Look for example at companies like Google or Apple, who can announce a record quarter, yet because they missed the expectations of the market, will still see their share DROP after the announcement.

Sure, Seagate got a bad rep for lack of reliability in various models. And the Gen 3 Sandforce products are once again delayed until 2016, and have less than impressive specs (they would be competitive if they had been released in Q2 2015 - by 2016 they will be average at best). But I bet that investors don't even know that fact. So it has to be something else.

Since 86% of STX is institutionally owned, then like the whole expletive stock market, it's driven by the millisecond algorithms with weekly tweeks by people. But STX is way off the norm. Nothing to do with product.

But VW is another exception!

 

[sfx2000]

My 2 cents - the spinning rust disk vendors are at risk due to the pace of innovation...

NAND based SSD's are accelerating, not just in the SATA/SAS space, but also in the PCIe and NVme arena, where there's less overhead and even higher bandwidth... and SSD's are generally following Moore's Law at the moment - single plane NAND hit a limit to some degree an 18-20 nanometer, but V-NAND on larger geometries is recovering nicely - Micron, Sandisk, Toshiba, Samsung have all made great strides there... and competition there is driving them towards lower costs and higher capacities - and again, just physics and yield improvements - this is perhaps a side effect of the post-PC generation, as SmartPhones/Tablets are all NAND based..

Prices on SSD's are coming down fast... 256MB for $80 compared to where they were even 12 months ago.. Newegg had a special not so long ago for a 4-pack of 128GB SATA3 SSD's for 160 bucks...

The Rust Disk players - they have their issues - basically we're at a point where heads can only get so small, the distance between tracks so narrow, and the limits of error correction - so the steps they do make come at a great R&D cost.

Compounding that - Seagate and WD don't seem to have a strong hand to play at the SSD table - yes, Rust Disks have high capacity, but generally, that's something that the SSD's vendors are working to improve on, and there, they're doing a great job...

There's a reason why Samsung and HGST sold off the rust drives... (HGST rust is owned by WD, FWIW)

 

[System Error Message]

Not all seagates are bad and not all WDs are good. WD green will definitely fail unless you can modify their firmware. My friend's WD green died on him and i had the exact same one that keeps on going because i modified the firmware to remove the head parking within the first few months of purchase.

I've seen some seagates still going till today. Hard drives can fail and it really depends on which model you choose. Worst of all is that the controllers used for external drives tend to be poor quality and fail quickly and WD has soldered the usb connector onto their recent line of portable hard drives.

 

[azazel1024]

My 2 cents - the spinning rust disk vendors are at risk due to the pace of innovation...

NAND based SSD's are accelerating, not just in the SATA/SAS space, but also in the PCIe and NVme arena, where there's less overhead and even higher bandwidth... and SSD's are generally following Moore's Law at the moment - single plane NAND hit a limit to some degree an 18-20 nanometer, but V-NAND on larger geometries is recovering nicely - Micron, Sandisk, Toshiba, Samsung have all made great strides there... and competition there is driving them towards lower costs and higher capacities - and again, just physics and yield improvements - this is perhaps a side effect of the post-PC generation, as SmartPhones/Tablets are all NAND based..

Prices on SSD's are coming down fast... 256MB for $80 compared to where they were even 12 months ago.. Newegg had a special not so long ago for a 4-pack of 128GB SATA3 SSD's for 160 bucks...

The Rust Disk players - they have their issues - basically we're at a point where heads can only get so small, the distance between tracks so narrow, and the limits of error correction - so the steps they do make come at a great R&D cost.

Compounding that - Seagate and WD don't seem to have a strong hand to play at the SSD table - yes, Rust Disks have high capacity, but generally, that's something that the SSD's vendors are working to improve on, and there, they're doing a great job...

There's a reason why Samsung and HGST sold off the rust drives... (HGST rust is owned by WD, FWIW)

I think that is a lot of it. Right now, until HAMR gets introduced, if, manufacturers have to move in to SMR from PMR and that comes with significant performance trade-offs for greater areal density. NAND storage is rapidly catching up in terms of $ per GB and since they perform significantly better, it drives down the use cases where HDD make sense over SSDs.

HDDs are still massively ahead of SSDs for bulk storage, with SSDs only caressing the $.30 per GB range for the cheapest with HDDs in the $.03 per GB range, so rust is still roughly 1/10th the price of NAND, but that has narrowed from more like 1/12th to 1/20th a few years ago. You also get in to a sufficiency of storage issue. Most users really just don't need much more than 256GB of total storage for everything they own. That doesn't mean there are not a lot that need more, but most laptops are shipping with SSDs and even a number of pre-built desktop and AiO systems are as well. It is cutting in to spinning drives a lot.

The way things are going, there is a pretty decent chance I'll seriously be looking at SSDs to replace bulk storage on my desktop and server in a few years once my 2x3TB RAID0 arrays start to be bumping up on max capacity (personally once less than 25% of free space remains, as performance starts to nose dive on spinning disks around there). The way NAND is tracking, in 4-6 years when I need to consider expanding storage, that might be around $300-400 to get 6TB of SSD storage...which would easily replace 6TB of mechanical storage with higher performance and less free space remaining.

Still might not be the way to go for me, but SSDs also have the advantage, that even with future network speed improvements, SSDs are so much faster than HDDs, there isn't much consideration about needing RAID for performance, so you can run JBOD and so long as the drive is reliable, no issues about mixing and matching capacities, unlike with HDDs (and personally wanting/needing RAID for sufficient performance). So in a few years I could drop a bunch on 6TB of storage even if am bumping up on using all of it, 6 months later add another 2TB SSD. If I start running out of space a year or two later, add a 2 or 3TB SSD, etc. That is messy with HDDs and impractical with RAID arrays, unless replacing with the same capacity (and better yet, exact same model) of HDD and then expanding the array.

Might actually be able to use Windows storage pools with SSDs.

 

[Chrysalis]

ssd's are definitely much more faster moving forward with annual advances.

As you say what hdd's are clinging onto is the price per gigabyte which I think wont last. As logic concludes a device with moving parts that is bigger will long term be more expensive to produce.

The other last issue with ssd's is how they can abruptly just fail without warnings, and the failure is complete i.e. not detecting on post so a completely dead drive, whilst hdd's tend to have warning signs with partial failures before complete failure, although I think enterprise ssd's are more robust on this issue.

 

[System Error Message]

While HDDs are still cheaper in price/GB but with the much lower costs of SSDs now and with cloud/online storage people are finding the low latency and high performance of the SSD more appealing than the power hungry and slow HDD. They would probably have an external hard drive for storing things that doesnt need performance while SSDs are now being offered as standard on laptops for quicker boot times and response with the lower power usage. The smaller form factor of SSDs also makes it easier for thin and light laptops.

 

[sfx2000]

Not all seagates are bad and not all WDs are good. WD green will definitely fail unless you can modify their firmware. My friend's WD green died on him and i had the exact same one that keeps on going because i modified the firmware to remove the head parking within the first few months of purchase.

I've seen some seagates still going till today. Hard drives can fail and it really depends on which model you choose. Worst of all is that the controllers used for external drives tend to be poor quality and fail quickly and WD has soldered the usb connector onto their recent line of portable hard drives.

Everyone has a bad run from time to time - and this just isn't limited to Rust, SSD's have had their fair share of issues (Samsung 840EVO as an example).

 

[jdabbs]

Seagate had a round of layoffs recently, which likely is contributing to the share price in the short term.

Smartphones and tablets--people are buying them instead of PCs these days. Fewer laptops and desktops, smaller market for hard drives and SSDs to compete in. To twist the knife, smartphones are also driving high-capacity flash production, which is a boon to SSD manufacturers.

 

[AdvHomeServer]

http://www.seagate.com/files/www-co.../_shared/documents/Q4FY15_Results_Release.pdf
http://finance.yahoo.com/echarts?s=STX+Interactive#{"range":"5y","allowChartStacking":true}

STX stock went from around $10 in 2011 to around $70 in late 2014. Nobody grows like that unless they know how to spin gold from straw. The stock falling to about $43 today is more about stock bubbles than technology. There's nothing in their financials that make then stand out good or bad to this level. Their products have little to do with the stock price unless they made some fantastic announcement that didn't work out. I imagine a lot of other tech companies look similar.

 

[sfx2000]

Just keep in mind that STX is still a $12B company...

Investors will jump in and that can drive the price up or down... they really don't care about tech, and they see R&D as a drain on the bottom line..

Layoff's always hurt - there is a short and long term loss to the company on a RIF, but it's also about balancing talent towards the future rather than the present. It sucks, and I'm directly impacted due to an activist investor pushing for the company to be sold..

Let me be direct - I am looking at a career change in the very near future as a result of an M&A driven by investors. Myself, and hundreds of other technical/engineering based colleagues... dear shareholders, thank you, hope that money burns a hole in your pocket, because it's definitely burned a hole in our hearts...

20-25 years ago, there was this huge push into Business and Legal degrees - I suppose we're reaping the rewards of that now...

 

[stevech]

@sfx2000 Hey, I worked in the same building with/for the same people for 25 years. Same customers too, mostly.
In that time, 6 "M&A", where we were always the acquired. (Merger is a B.S. term).
As each new CEO came to give the Pollyanna speech, eyes rolling everywhere, we learned what to expect next.

So I went to an employee owned but large company which issued stocks internally, options, bonuses, etc. What a difference. Great place.
Alas, the founder/CEO was ousted by the board members who wanted to cash out their stock and get rich. Then the new incoming rent-a-CEO took the company public and ruined it. Mr. Train-wreck took his bonus and as all of his kind do, boogied off to some new 5 year deal.

I knew this would happen, but I got lots and lots of years and stock before the IPO - and shortly thereafter, I retired. And sold all my stock.

If I were king for a day
1. CEOs have to be employees and not on a 5 yr. contract with a nefarious mission for the MIB.
2. Senators' term limits and make lobbying a felony.

 

[sfx2000]

I knew this would happen, but I got lots and lots of years and stock before the IPO - and shortly thereafter, I retired. And sold all my stock.

Oh, trust me, saw it coming... options and stocks, paid off well..

I'm not ready to retire just yet...

 

[sfx2000]

So I went to an employee owned but large company which issued stocks internally, options, bonuses, etc. What a difference. Great place.
Alas, the founder/CEO was ousted by the board members who wanted to cash out their stock and get rich. Then the new incoming rent-a-CEO took the company public and ruined it. Mr. Train-wreck took his bonus and as all of his kind do, boogied off to some new 5 year deal.

I know the company - just down the street... Something Always Inside Corporate - darkside stuff in a ODO sense...

 

[stevech]

I know the company - just down the street... Something Always Inside Corporate - darkside stuff in a ODO sense...

Yes - I worked at Campus Point HQ near UCSD. And in Ventura County prior to that for 2 decades. In the spook world.

I'm "retired" but doing near full time consulting (software and firmware) - netting out as much as when I was salaried. Work when I want to. Don't REALLY need the income but it helps offset the US Gov's administration operating in Robinhood mode.

 

[sfx2000]

Yes - I worked at Campus Point HQ near UCSD. And in Ventura County prior to that for 2 decades. In the spook world.

I'm "retired" but doing near full time consulting (software and firmware) - netting out as much as when I was salaried. Work when I want to. Don't REALLY need the income but it helps offset the US Gov's administration operating in Robinhood mode.

Wow, like one block south of me - the old IVAC factory (longest building in SD County)