Seagate ends acquisition talks, starts $2 billion buyback

By on December 1, 2010, 8:00 AM
It looks like Seagate is not going private after all. After acknowledging a “preliminary indication of interest” on a potential private-equity buyout in October, the company has now decided to end all discussions and instead will be buying $2 billion of its own shares back. Apparently, talks collapsed after the buyout firm TPG Capital wasn’t able to find other partners to raise enough financing for the takeover – expected to require up to $4 billion.

The growing shift towards flash-based storage may have made potential buyers reluctant to take the bid higher, especially when looking at the next few years. But for now the HDD market is still a strong, cash-generating business and Seagate seems optimist about the future. The company said it believes that demand has improved, and it expects revenue to be at least $2.7 billion for the current quarter, and gross margin as a percent of revenue to be at least 19.5%.

That’s down from approximately $3.03 billion revenue and gross margin of 30.5% a in the year-ago quarter, but they don’t seem in a hurry to sell the company for several times less their past year's earnings. Even if prospects look better for solid-state drives, traditional hard drives are not going away anytime soon, but on the other hand the company has enough to worry about losing its leadership position to Western Digital and dwindling profits from increased competition.




User Comments: 8

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Kibaruk Kibaruk, TechSpot Paladin, said:

Of course SSDs look good, they are mainly used as primary OS install disk for its fast speed and programs whatnot...

BUT...

How would SSDs replace Raid storage anytime soon? With the prices on the high volume ones not even close. Certainly I doubt in a couple of years or so, the main trend will be hybrid disks.

gwailo247, TechSpot Chancellor, said:

Unless they come up with a process in which flash memory can approach multi terabyte HDDs in price, I would think that demand for traditional HHDs will rise. All that content that's out there needs to be stored somewhere, and people won't be keeping their music and movie collections on SSDs. Even if everyone stores stuff in the "cloud", at the end of the day that stuff has to be stored on a hard drive too.

Jibberish18 said:

Shame you're not seeing more options for their Hybrid SSD/Magnetic drives. People on Newegg say they still have a ways to go with firmware updates and designs, as they have their share of problems. But you'd figure, that most of their hard drives would consist of partial SSD storage for the OS, including Desktop hard drives, which you don't see anymore.

tengeta tengeta said:

I think its a smart move, more and more people are learning about the write limits on SSD's and eventually if it isn't going to get fixed or at least improved people will be going back to HDD's in a heartbeat. I know its why I'm still using them.

Guest said:

I think it only needs 2 more years, so that the SSDs are cheaper, increase their capacity and eventually take the place of conventional HDDs.

TeamworkGuy2 said:

I am sticking with HDs for at least a few years, a 60 GB SSD is still over $100 and a 1 TB HD is well under a hundred.

You could raid 2 WD Caviar Blacks for ~$120, and they would probably last longer than a SSD, although the quick boot and shut down of SSDs is tempting, but in the end my wallet can't afford an SSD.

PanicX PanicX, TechSpot Ambassador, said:

tengeta said:

I think its a smart move, more and more people are learning about the write limits on SSD's and eventually if it isn't going to get fixed or at least improved people will be going back to HDD's in a heartbeat. I know its why I'm still using them.

It's expected that 90% of the cells in a SLC drive will tolerate 1 to 5 million writes with about 3% only tolerating 100,000 writes. This coupled with wear leveling means that a 64GB SSD writing at a constant 80/Mbps, will start losing 3% of it's capacity after 2.5 years, with an estimated 51 years until drive failure.

[link]

http://en.wikipedia.org/wiki/Solid-state_drive

Lokalaskurar Lokalaskurar said:

Kibaruk said:

How would SSDs replace Raid storage anytime soon? With the prices on the high volume ones not even close. Certainly I doubt in a couple of years or so, the main trend will be hybrid disks.

Many agreed with what you're thinking. However, keep in mind that everyday technology is developing faster and faster still. Just about 4 years ago, construction-grade steel became 30% stronger, thanks to recent advancements in the same kind of nanotechnology used in computers. How long have mankind been using steel? About 1000 years or so?, and suddenly: Boom, it became 30% stronger during 2006 alone. There are many technological advancements happening at the moment...

However: the future is hard to foresee. Really nobody would have predicted that this piece of text was ever to be written at all! I personally think that in a couple of years or so, pure SSD's will be a common sight in the very developed countries' markets like South Korea's and Japan's.

That high price will drop eventually, just be patient.

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