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TECHHEADS: Seagate Technology to acquire Maxtor in stock swap deal
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| Fir3start3r |
Um.....woah?? 
Any tech-head/geek/nerd will tell you this is a major, major deal...
Looks like Maxtor is toast...
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Seagate Technology to acquire Maxtor in stock swap deal
By Scott M. Fulton, III
Published Wednesday 21st December 2005 18:14 GMT
Scotts Valley (CA) - In a move which is estimated to give it as much as 45% of the worldwide storage market, Seagate Technology announced this morning it will acquire Maxtor, one of its leading rivals, for a stock swap valued at $1.9 billion.
This morning's news gives little indication that much of Maxtor's product line, management team, or heritage will be left behind. For each share of Maxtor common stock that shareholders currently own, they will receive 0.37 shares of Seagate stock. After the swap is completed in the second half of 2006 - pending US regulator approval - Maxtor shareholders will collectively own only 16% of the combined, new Seagate. The Maxtor name will also vanish, as apparently will most of its management, though Maxtor CEO Dr. C. S. Park will take a seat on Seagate's board of directors. Corporate headquarters will be located in Seagate's current home in Scotts Valley, California.
In an interview with MarketWatch (http://www.marketwatch.com/news/sto...teid=mktw&dist=), Seagate CEO Bill Watkins acknowledged that both companies make essentially the same products, though Seagate stands a lot to gain through its acquisition of Maxtor's manufacturing facilities in China and East Asia. According to the Bangkok Post this morning (%20http://www.bangkokpost.com/breaking_news/breakingnews.php?id=69027), a possible relocation of Seagate's manufacturing focus to China could threaten its current Thai facilities established in 2000, where the company had once employed as many as 50,000, but which has since scaled back to one-third that number.
In March of this year, Maxtor announced it was scaling back its manufacturing operations in Singapore - which includes laying off up to 5,500 workers - to open new facilities in China. Now, with the Chinese facility online, and despite manufacturing glitches that contributed to the withdrawal by Maxtor of lower-capacity hard drives from the market, Seagate will apparently be reaping the benefits of Maxtor's investment.
In a statement this morning, Seagate said it expects its earnings to rise between 10% and 20% in the first 12 months of operation as a combined company, over Seagate's current earnings level. The estimate, notably, did not encompass Seagate's and Maxtor's combined current earnings, and warned, "As with other past combinations of disc drive manufacturers, revenue attrition is anticipated to result from this combination." The statement probably indirectly referred to Maxtor's 2001 acquisition of Quantum, whose resulting "revenue attrition" did not gain that company any ground, or "scale," in its bid to become the leading hard drive manufacturer.
In fact, Maxtor has been in financial struggle for a long time. In the past five years, the company achieved profitability only in 200 and 2003. In 2004, the company lost $183.4 million. Along with the losses came an estimated decrease in market shares to Seagate and Western Digital. According to its most recent quarterly statement, Maxtor is active only in the enterprise and desktop segment. The firm sold about 975,000 enterprise drives and about 12.2 million desktop drives during the third quarter of this year. Seagate sold 3.1 million enterprise drives and 17.4 million desktop drives in the same time frame. Additionally, Seagate was able to ship 2.4 million mobile hard drives as well as 3.9 million units into the consumer electronics market.
"With the increased scale of the combined company," Seagate's Watkins said in this morning's statement, "we can reduce overall product costs and provide more innovative products at more competitive prices." The combined company expects to save $300 million in supply chain and research/development costs during its first year of joint operation. Perhaps by coincidence, $300 million is the termination fee that Seagate would pay to Maxtor should the acquisition deal fail to be completed.
What isn't yet clear from today's news is which product lines will remain following the acquisition, and which will disappear. Just two days ago, Maxtor issued a press release stating it was preparing to introduce its next generation of storage technologies at the upcoming CES conference next month. Recently, Maxtor's current successes have been in the production of high-performance DiamondMax hard drives; though in the enterprise, Maxtor has been a supplier of drive equipment to network storage leader EMC. Seagate, meanwhile, has seen recent successes as a supplier of hard drives for digital video recorders. In June of this year, Seagate announced a dramatic shift (http://www.tgdaily.com/2005/06/08/s...recording_tech/) toward perpendicular recording technology, starting with its Momentus product line, stating that all new product lines would incorporate perpendicular by the end of next year. Perpendicular recording rearranges bits stored on a disc platter in a new way that dramatically improves bit storage densities, without having to increase the thickness of the underlying magnetic substrate. Maxtor actually led the research revolution in perpendicular storage, through its MMC Technology division, with some of the first working prototypes as early as January 2002. However, Seagate managed to beat Maxtor to market, with Toshiba and Samsung following close behind.
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| VERTiG0 |
I hope Seagate doesn't use Maxtor technology in their forthcoming products, because that'd be bad news... Maxtor in my mind = .
Seagate = GLORIOUS.
I've used Seagate, IBM, and Maxtor drives in the past, and all of my Seagate drives have been wonderful with no problems ever. Both IBM drives I had failed catastrophically, and EVERY Maxtor drive (5) I've had have failed.
Hooray Seagate. |
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| infinity HiGH |
I've had 3 Maxtor drives and all work perfectly fine.
Seagate is a good company too though. |
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| El Kay Dee |
| quote: | Originally posted by VERTiG0
I hope Seagate doesn't use Maxtor technology in their forthcoming products, because that'd be bad news... Maxtor in my mind = .
Seagate = GLORIOUS.
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indeed...
i dont see why seagate is doing this tho cos their stock is most def. gonna go down(as compared to what u read in forecasts)due to that same reason of maxtor being sucky...:conf: |
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| rabbitjoker |
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| smuncky |
| quote: | Originally posted by VERTiG0
I hope Seagate doesn't use Maxtor technology in their forthcoming products, because that'd be bad news... Maxtor in my mind = .
Seagate = GLORIOUS.
I've used Seagate, IBM, and Maxtor drives in the past, and all of my Seagate drives have been wonderful with no problems ever. Both IBM drives I had failed catastrophically, and EVERY Maxtor drive (5) I've had have failed.
Hooray Seagate. |
im actually going to buy another maxtor drive this week, cuz ive bought one 3 years ago and its been great.
u serioulsy must have some bad luck with it.
ive also read a few reviews on the drive that im buying and it was tested with other drives like seagate, ibm and samsung....and in the end seagate was the worst out of the 4 - performance wise |
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| Fir3start3r |
| quote: | Originally posted by VERTiG0
I hope Seagate doesn't use Maxtor technology in their forthcoming products, because that'd be bad news... Maxtor in my mind = .
Seagate = GLORIOUS.
I've used Seagate, IBM, and Maxtor drives in the past, and all of my Seagate drives have been wonderful with no problems ever. Both IBM drives I had failed catastrophically, and EVERY Maxtor drive (5) I've had have failed.
Hooray Seagate. |
I'd tend to agree with you.
In my long experience with deskside support, MAXTOR is a usual suspect. :whip:
I hope too that they kill whatever MAXTOR process they use... :nervous: |
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| El Kay Dee |
| quote: | Originally posted by smuncky
im actually going to buy another maxtor drive this week, cuz ive bought one 3 years ago and its been great.
u serioulsy must have some bad luck with it.
ive also read a few reviews on the drive that im buying and it was tested with other drives like seagate, ibm and samsung....and in the end seagate was the worst out of the 4 - performance wise |
other than urself and infinity high, everyone i know who bought maxtor drives had HD crashes and poor performance
i used to have maxtor drives in the early 90s and we too had issues then we switched to seagate.
infact my samsung HD from 99 is still going strong as well |
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| Jem_hadar |
Ive had one Maxtor drive fail on me. I haven't owned one since.
Usually I buy WD drives, though I bought a Seagate for my latest 250.
Jem |
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| daves |
Maxtor eats up Quantum... Seagate swallows Maxtor... the cycle continues...
I'm gonna start guessing now on who eats up Seagate in the next few years |
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| infinity HiGH |
| quote: | Originally posted by daves
Maxtor eats up Quantum... Seagate swallows Maxtor... the cycle continues...
I'm gonna start guessing now on who eats up Seagate in the next few years |
Western Digital probably, lol |
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