Friday, January 27th 2012

Seagate Announces Quarterly Cash Dividend Increase by 39%, Share Repurchase of $1B

Seagate Technology plc (“Seagate” or the “Company”) (NASDAQ:STX) today announced that its Board of Directors (the “Board”) has approved an increase to its quarterly cash dividend from $0.18 per share to $0.25 per share, an increase of 39%. The increase is effective with the dividend payable on March 1, 2012 to shareholders of record as of the close of business on February 15, 2012. The payment of any future quarterly dividends will be at the discretion of the Board and will be dependent upon Seagate’s financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by the Board.

Additionally, the Board has authorized the Company to repurchase an additional $1 billion of its outstanding common shares (the “January 2012 authorization”). The January 2012 authorization extends Seagate’s commitment to enhancing shareholder value by utilizing the robust cash generation ability of its business. To date, Seagate has utilized approximately $1.1 billion against the existing $2 billion share repurchase authorization approved by the Board on November 29, 2010 to repurchase 67.8 million shares. The remaining balance of the November 2010 authorization ($0.9 billion) is expected to be utilized by the end of fiscal year 2012 (June 29, 2012), market and other economic conditions permitting.

“These actions by the Board demonstrate our ongoing commitment to maximize shareholder value,” said Steve Luczo, Seagate chairman, president and CEO. “The Board and the management team remain confident in the company’s ability to maintain a strong balance sheet and sustain exceptional cash generation from the business.”

Seagate expects to fund the dividend and share repurchases through a combination of cash on hand, future cash flow from operations and potential alternative sources of financing. Share repurchases under these authorizations may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, or by any combination of such methods. The timing and actual number of shares repurchased will depend on a variety of factors including the common share price, corporate and regulatory requirements and other market and economic conditions. The share repurchase authorization may be suspended or discontinued at any time.
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26 Comments on Seagate Announces Quarterly Cash Dividend Increase by 39%, Share Repurchase of $1B

#1
btarunr
Editor & Senior Moderator
I think it's evident now that Seagate and WD have overplayed the Thailand flood situation to artificially inflate HDD prices to clear inventories and rob us blind. They're acting like big oil.
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#2
DigitalUK
if the SSD manufacturers lowered the prices of the SSD drives there wouldnt be a problem, who would buy a mechanical harddrive from seagate when you could buy a much faster SSD let seagate and the other rip off murchants die.
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#3
FreedomEclipse
~Technological Technocrat~
by: btarunr
I think it's evident now that Seagate and WD have overplayed the Thailand flood situation to artificially inflate HDD prices to clear inventories and rob us blind. They're acting like big oil.
as a consumer (and not the first or last) I think that all the HDD manufacturers that increased their prices due to the flooding should be investigated by watchdog organisations and if found guilty, fined a hefty amount for price fixing.

then the floods hit, HDD prices went up 5 or 6 fold here in the UK and that is not acceptable. Id understand if they needed to increase it by 1 or 2 times the amount, but the prices were just extortionate.

and this 39% increase in profits when their production is supposed to be heavily effected by the floods and the rebuilding is just ludicrious.

Im not sure if its possible but surely the consumers can file a classaction lawsuit against HDD manufacturers who used the event to raise costs unnessarily
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#5
meirb111
by: btarunr
I think it's evident now that Seagate and WD have overplayed the Thailand flood situation to artificially inflate HDD prices to clear inventories and rob us blind. They're acting like big oil.
i agree this dividend increase is from the outrageous hard disk price its insane:mad::mad:
some hard drives cost 180% more than a year ago
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#6
DigitalUK
in the UK where i am 200% is the minimum increase i would say 300% is the norm now eg.. a 500GB WD or Seagate would cost £28 same harddrive at the moment is £65.99. the problem is the manufacters add on there BS Premium, then the suppliers add theres on and the end user bends over.
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#7
Hustler
Big business ripping off the consumer....who'd have thought it.:rolleyes:
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#8
FreedomEclipse
~Technological Technocrat~
by: DigitalUK
in the UK where i am 200% is the minimum increase i would say 300% is the norm now eg.. a 500GB WD or Seagate would cost £28 same harddrive at the moment is £65.99. the problem is the manufacters add on there BS Premium, then the suppliers add theres on and the end user bends over.
On a more positive note - I scored a brand new 2TB WD drive for about £75 last night. quite a good deal seeing as 1TB samsung F3's used to cost £40. Sometimes one must really trawl the FS section for good stuff.

but yeah - the exact same drive would cost me around £120-140 here in the UK when its only around £100 on newegg :shadedshu:shadedshu utterly disgusting.
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#9
RejZoR
Paid 230 EUR for a 2TB Caviar Black like 2 years ago. I'd bend over again for that. It's masive, it's pretty fast and silent. With 6GB of RAM i don't really crave for SSD drive just yet. Hell, it even boots in 45 seconds so all is well. For what i need it it's more than fast enough.
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#10
btarunr
Editor & Senior Moderator
To think about it, both WD and STX should have have lost sales (revenue). On top of that, both made big-ticket acquisitions this year (STX bought Samsung HDD, WD bought Hitachi HDD). Yet they managed to pull off OK Q4s with cash to pay increased dividends and stock-repurchases?
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#11
FreedomEclipse
~Technological Technocrat~
by: RejZoR
Paid 230 EUR for a 2TB Caviar Black like 2 years ago. I'd bend over again for that. It's masive, it's pretty fast and silent. With 6GB of RAM i don't really crave for SSD drive just yet. Hell, it even boots in 45 seconds so all is well. For what i need it it's more than fast enough.
I didnt crave an SSD either back then I was running my OS on i think a 80Gb Samsung F1 or something, it was a pretty fast drive anyway so i wasnt really bothered by boot times.

you could go from 45 second boot to about 10-15seconds and your PC would totally be ready to load up firefox with 30tabs, steam and MSN/yahoo messenger or other similar programs almost instantly the moment you put your password in to login to windows.

not to mention how responsive your overall windows experience becomes once you load your most regularly used programs onto it like paintshop/photoshop, Roxio/Nero, M$ office etc etc.

Programs that normally would start up in about 20seconds are reduced to 3 seconds.

----- You might not crave it, but im sure you wouldnt want to go back to using mechanical hard drives as boot drive once youve tried it
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#12
tomkaten
by: FreedomEclipse

----- You might not crave it, but im sure you wouldnt want to go back to using mechanical hard drives as boot drive once youve tried it
Call me crazy, but I'm one of the "early adopters" that have done just that. Sure, it was blisteringly fast and all that, but all the tricks I had to employ just to avoid repeated writes on the drive were not worth my while.

Move swap, disable indexing, superfetch and system restore, don't run too many benchmarks (CrystalDiskMark writes in excess of 4 GB on the drive in one session of testing)... All of the above for 25 seconds shaved when booting Windows. It was too much of a hassle in my case, because I couldn't afford any drives over 64 GB and the space was not big enough for me to enjoy this new technology at its fullest.

I mean, don't get me wrong, I'm well aware of all the benefits they provide, but not everyone needs them.

Two HDD's serve me well enough, for now.

(Somewhat) On Topic: I've only had one drive in my 20 year computing history die on me (a Quantum), and this Seagate that I own now will be my second... Increasing reallocated sectors count... Impending doom. It picked the most inappropriate time to do so, considering the crazy prices we're seeing these days. Seagate had better step up their QA process, cause it's failing badly. This drive has been faulty from day 10 or so after purchase.
Posted on Reply
#13
R_1
Well, as they said, supply will be normal 12 months from now, if another flood or earthquake wont hit until then. You never know. :)
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#14
FreedomEclipse
~Technological Technocrat~
by: tomkaten

Move swap, disable indexing, superfetch and system restore, don't run too many benchmarks (CrystalDiskMark writes in excess of 4 GB on the drive in one session of testing)... All of the above for 25 seconds shaved when booting Windows. It was too much of a hassle in my case, because I couldn't afford any drives over 64 GB and the space was not big enough for me to enjoy this new technology at its fullest.

I mean, don't get me wrong, I'm well aware of all the benefits they provide, but not everyone needs them.
these tweaks take less then 2mins to do.

theres even a program that does all these things for you, are you saying that a simple mouse click is 'too much of a hassle' for you???

Maybe in the early days (you being an early adopter as you said) people didnt know how to set their OS up properly for SSDs but things have progressed since then and its no longer a case of trial and error finding out what you need to disable or edit in the registry.

Disable Prefetching, Disable Defrag, Disable indexing, Disable windows restore, Disable system hibernation.

Pagefile/swapfile is an optional tweak - even though guides tell you to turn off pagefile. many users either leave it untouched (managed by windows) or set it manually to 1 or 2Gb. If you have a lot of ram like I do then the system doesnt use much pagefile at all, some applications do require pagefile though and how much it uses depends purely on the program. W7 is good at pagefile and memory management in general so its fine to leave it as system managed. If W7 had to use pagefile it would be reading from it more then writing to it which is fine.

If youre tech savvy enough you can do all these tweaks manually in less then 2mins as you already know where everything is. Also its not like you need to constantly set these tweaks all over and over again once its set up unless youre the kind of person that installs a new copy of W7 every day

Otherwise you must be a pretty busy man.
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#15
ColdRush
I've already moved on to using an SSD as a primary drive for all of my recent machines. I simply don't need the space. I've always been very organized so 128gb is plenty for me even with my steam library.
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#16
Static~Charge
by: FreedomEclipse
as a consumer (and not the first or last) I think that all the HDD manufacturers that increased their prices due to the flooding should be investigated by watchdog organisations and if found guilty, fined a hefty amount for price fixing.
In the U.S., it falls under the Sherman Antitrust Act. Now all we have to do is get the government to enforce this 122-year-old legislation....
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#17
FordGT90Concept
"I go fast!1!11!1!"
Which they haven't in...early 1900s? Or was it late 1800s? In other words, it might as well not exist any more.
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#18
wikidoo
Huh?

Ok folks, lets think this through using Vulcan Logic...

- 30% of the worlds hard drive manufacturing was taken off-line in November.
- hard drive supply chain had about 4 weeks of inventory.
- Inventory was completely depleted during the Holiday season
- The annual total number of hard drive units (TAM) for 2012 was projected to be 170 million units.
- Post flood, the industry can only make 130 million units.
- This past week Hard drive ceo's stated that the industry wont get to the 170 unit mark until CY2013.
- In the mean time, big companies like Amazon, YouTube, Microsoft, EMC, NTAP and Facebook are growing like a virus.
- Raw storage demand (in bytes) is growing at 100% per year.
- By the first quarter of CY2013, capacity in the industry will be at the 170 million unit mark. However, the TAM demand will have expanded another 15%.
- Once capacity has met the demand, it will take another half year to build up inventory levels to 4-6 weeks.
- All hard drive Customers are on allocation. They don't get their orders filled.

The above statements are facts. They are not opinions.

Ok, here's a hypothetical question... Which customers are going to get their hands on some hard drives? The average joe blow like you and me? or the big OEMs like Amazon (or Facebook with their big IPO coming up)? You better believe the drives will go to the entity that pays the highest price for them. Those companies have shareholders to answer to.

Only a hand few of drives get to the retail markets and when they do, we pay a lot for them. Simple supply and demand. A shortfall of 40 million units per year will do that. Especially in a razor thin margin industry. Look at what happened to the rare Earth metal pricing. Those shot up 500-600% overnight. If the drive prices are to high, don't buy the drive. That's the great thing about an open market, the demand side of the equation will always balance out the supply side.

p.s.
the valuation of hard drive industry historically has traded at an 80% discount to their market peers. If I was in their shoes, I would try to milk this environment for every penny I could.
Posted on Reply
#19
Lazzer408
by: DigitalUK
if the SSD manufacturers lowered the prices of the SSD drives there wouldnt be a problem, who would buy a mechanical harddrive from seagate when you could buy a much faster SSD let seagate and the other rip off murchants die.
Maybe they know what's coming and they're in a panic to make as much as they can before they die. Going out with a bang? ;)

by: _JP_
Youtube: JoYWdHe4tQ4
I knew I seen her somewhere before.

Posted on Reply
#20
FreedomEclipse
~Technological Technocrat~
by: Lazzer408
Maybe they know what's coming and they're in a panic to make as much as they can before they die. Going out with a bang? ;)
Possible but a bit far fetched as they only aquired Samsung HDD division last year, It would be a waste of seagates money if they bought samsungs HDD division then did a withdraw from the market RIGHT AFTER the handover. Seagate obviously wants to make some money in this market, its just that nobody banked on a flood hitting them in such a way that it severely effects production so they can play on it and ramp up their profits - If i was the boss of Seagate, WD or Toshiba, i wouldnt know wheather to laugh or cry............................






























































while making my way slowly to the bank
Posted on Reply
#21
TIGR
You might not crave it, but im sure you wouldnt want to go back to using mechanical hard drives as boot drive once youve tried it
by: tomkaten
Call me crazy, but I'm one of the "early adopters" that have done just that.
If you're crazy tomkaten, then so am I. I jumped on the SSD bandwagon two years ago when I found a <$1/GB deal. It was a "deal" at the time, yet I paid ~15x per GB for a performance boost on the scale of seconds. What I did right was not paying >$1/GB for an SSD. What I did wrong was not going back to mechanical HDD sooner. I don't need Photoshop to open in 2 seconds instead of 10. I don't need Thunderbird to open in 1 second instead of 4. I do have a use for the extra 2.8GB of capacity I picked up in a straight trade for my old 128GB SSD. The drives that replaced that SSD (in RAID) don't bottleneck me in any way that matters.

Even if I had to choose between a 128GB SSD and 2TB of HDD capacity (a comparison more representative of today's SSD/HDD price ratio), I'd pass on the SSD.

by: wikidoo
Ok folks, lets think this through using Vulcan Logic....
Thank you for injecting some reason into this thread.
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#22
Static~Charge
by: wikidoo
Ok folks, lets think this through using Vulcan Logic...
Okay, let's inject some non-Vulcan logic into this thread, since we're dealing with irrational humans instead of rational Vulcans:
    Hard drive supplies are down by 30% due to the flooding (your statistics).
    Hard drive prices have increased by at least 100% (example: WD 500GB hard drive that was $45 before the flood is now selling for $90, down from $105 a month ago).
    Hard drive manufacturers are reporting profits from the previous quarter that are much higher than usual.
The above statements are facts. They are not opinions.

With reduced availability of hard drives, you would expect lower profits due to lower sales. However, hard drive prices have increased far in excess of the reduction in availability. Conclusion: The hard drive manufacturers are taking advantage of the disaster to raise prices and make a killing, an open-market tactic commonly known as "price gouging":

Price gouging is a pejorative term referring to a situation in which a seller prices goods or commodities much higher than is considered reasonable or fair. This rapid increase in prices occurs after a demand or supply shock: examples include price increases after hurricanes or other natural disasters. In precise, legal usage, it is the name of a crime that applies in some of the United States during civil emergencies. In less precise usage, it can refer either to prices obtained by practices inconsistent with a competitive free market, or to windfall profits.

http://en.wikipedia.org/wiki/Price_gouging

And I agree with you: If the drive prices are too high, don't buy the drive. If manufacturers increase production in the future and can't find enough buyers, then prices will come down again. However, it wouldn't surprise me if production levels don't reach pre-flood levels any time soon (you say "cynical", I say "realist").
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#23
extrasalty
I am absolutely done with Seagate. Greedy bastards. Last year alone I returned 6 hard drives to them, and 2 were their replacements. Slow shipping, slow processing, decreasing quality, decreasing warranty, more shipping than WD... the list goes on. I'm not saying other manufacturers were not flaky, WD failed me once in 2 month old hard drive, and I dropped one portable, but both times returns were back twice as fast. And they offer discount shipping. And that's before the shortage. I was a diehard Seagate fanboy, now their excrement made me switch to ZFS and be paranoid about dead hard drives. And believe me- bad hard drives corrupt data a lot earlier than they crash.

My SSD needless to say is just fine with over 2 years and 97%health.

I wound up getting a bunch of drives from ebay. Couple of 150gb raptors for $40, samsung 2gb for $106, wd black 1gb for $75, all prices shipped and all in warranty for 3 and 5 years (of course about 1 year less). All while Seagate was pushing their $77 2GB for $240. F@#$ em.:nutkick:
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#24
xenocide
Yup. They definitely milked it for what it was worth. I remember buying a WD Caviar Black 1TB on Black Friday at BB for like $70, when they were listed on Newegg for $80-90. Now that same drive is listed (on sale) on Newegg for $160, marked down from $210. This is also months after the prices hit their high. I remember the week the flooding happened seeing the same drive for over $300. You cannot say that's a reasonable increase. They clearly price gouged. Even companies that were barely affected raised the prices on their HDD's...
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#25
Halk
by: Static~Charge
Conclusion: The hard drive manufacturers are taking advantage of the disaster to raise prices and make a killing, an open-market tactic commonly known as "price gouging"
I believe you're right on the money with this one. Basic economic theory says that monopolistic markets are bad for consumers and price equilibrium is reached at a point much higher than under perfect competition. A textbook monopoly is very rare indeed, but the monopolies we do get are oligopolies.

Within a particular country oligopolies are typically tackled by government legislation, in the UK for example we have a specific government body in charge of dealing with them. You could argue it's successful, but you could also argue they are slow to react and not as aggressive as they should be.

On the international stage there's little or no way to regulate oligopolies. Significant barriers to entry exist, which make it difficult for natural market forces to fix problems. In a perfect market price gouging would instantly disappear as competition forced prices downwards, in an oligopoly suppliers know not to shift prices down.

The individual companies are behaving as individual companies do and should, they don't have ethics, they just act in their own best interests. In a healthy market that would lead to great prices for consumers, in an unhealthy market it does not.

Economics states that eventually substitute or direct competing goods would enter the market, especially on the international stage as individual governments are more likely to intervene to support an industry where the industry does not exist already. Realistically though it won't happen with tech manufacture, although SSDs will eventually push down HD prices, however not for a few years. Likewise cloud storage will have an impact as well on demand.

It's also worth remembering that hard drives are components and in virtually all uses of them they are not the overwhelming cost in an item (where they are demand is more elastic and prices are not as rip off). Because they're not the overwhelming cost then demand is less elastic than it might be - e.g. the Dell box has $200 in parts and only $40 of that is the hard drive, it doesn't matter as much if the price of the drive goes up by 50%, as that's only $20 while the price of the box going up by 50% would have a much more drastic effect on demand.

The only real way to look at things like hard drives which exist in an oligopoly where there are significant barriers to entry is to look at them as a finite commodity. Oligopolist activity will force prices to behave in this manner.

Sad really, it's caused me to postpone my media server upgrade... but frustratingly nothing much can be done about international cartels such as OPEC, not while people are unwilling to stop consuming the product.
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