SINGAPORE--Being "late" to the solid-state drive (SSD) game has proven a costly affair for Seagate, according to an analyst at a local securities firm.
The analyst, who declined to be named, told ZDNet Asia Thursday in a phone interview that the decision to close its Singapore manufacturing facility was the hard-drive maker's move to cope financially.
He suggested that the company's poor financial showing could be the result of its hesitation to roll out SSDs. Pointing to Seagate's rival Western Digital, which has jumped on the SSD bandwagon, he noted that the company appeared to be in better financial shape.
Earlier this week, Seagate announced that it would shut its manufacturing site in Singapore by end-2010. The facility's operations would be relocated to other existing manufacturing plants located in China, Malaysia and Thailand, according to a Seagate spokesperson.
The move is expected to impact 2,000 employees at the Singapore plant. Seagate has over 8,000 employees in the country, where the company also has a recording media operations facility and a product design and development center.
The latest announcement comes on the heel of two retrenchment exercises conducted by the company earlier this year. The storage vendor axed 10 percent of its U.S. staff strength in January, followed by another 1,100 across its global workforce between May and July.
According to the analyst, the closure was the result of Seagate's "late adoption of [SSD technology] and poor [financial] results". "They had to look for ways to tighten the ship," he said.
The broad trend propelling the industry saw "a lot of devices" integrating solid-state technology, which could fit in "all kinds of environments", he noted.
According to its financial filings, Seagate incurred net losses for three consecutive quarters since October 2008. In the latest quarter, ended Jul. 3, the company reported a net loss of US$81 million on revenues totaling US$2.35 billion.
In comparison, Western Digital reported net income for three consecutive quarters since October 2008. It registered US$196 million net income in the latest quarter, ended Jul. 3, on US$1.9 billion revenues. However, the company in January announced plans to shut its manufacturing plant in the Eastern Malaysian state of Sarawak.
Western Digital entered the SSD market with its acquisition of SiliconSystems, which last year accounted for one third of worldwide SSD revenues.
Last November, Seagate then-CEO Bill Watkins said while the company is developing a solid-state drive, it had no plans to introduce SSDs to the market in the immediate future.
Play video
There are currently no comments for this post.