The disk drive industry has had a tough quarter, but Quantum Asia-Pacific marketing director David Rawcliffe says that doesn’t mean the sky is falling in.
Price pressure and a weak demand for drives (particularly in the high-end market) have resulted in Quantum posting a net loss of $US32 million for its third quarter ending December 18, on sales of $US1.52 million.
Seagate last week announced a second--quarter (ending January 2) net loss of $US183 million on revenue of $US1.67 billion. It is slashing 10,000 jobs worldwide, 10% of its global workforce.
Singapore-based Rawcliffe says it will probably take this quarter to reduce a lot of the excess inventories. He believes it will be a competitive quarter.
“It will be a few months before we get back to a more balanced supply-demand ... locally, within Asia, there are a lot of big question marks but general feeling seems to be that we can hope the economies around Asean, [South-east Asia] and Korea will be getting back on their feet again by mid-year. So we should start to see business improve in the middle of the year. And I think worldwide it will probably be a quarter or so to burn off that inventory.”
Rawcliffe says it’s no worse than the situation two or three years ago when there was similar oversupply.
“The key thing is for people not to think that the sky is falling. This is the way business goes. We’ve gone through similar tricky quarters in the past and ended up being more successful and better after them. ”
Seagate Australia-New Zealand director Paul Kruss, in Sydney, agrees it’s a cyclical business but says “tremendous price pressures” during the past six months have been extraordinary.
“It’s probably very similar to what happened back in 1991. Drive companies got into a lot of difficulties and had a lot of losses but then went forward from there with six or seven years of good growth. Without question you come out of it stronger.”
He says that in Australia and New Zealand the demand is starting to pick up again.
Kruss says that some of the smaller volume competitors might be in some difficulty because of the oversupply, but he adds that there is always consolidation in the drive industry.