Seagate and Samsung Announce Broad Strategic Alignment

[btarunr]

Seagate Technology, the world leader in hard disk drives and storage solutions, and Samsung Electronics Co., Ltd., a world leader in digital consumer electronics and information technology, today announced that they have entered into a definitive agreement under which Seagate and Samsung will significantly expand and strengthen their strategic relationship by further aligning their respective ownership, investments and key technologies. Major elements of the agreement include:

• Samsung combining its hard disk drive (HDD) operations into Seagate
• Extending and enhancing the existing patent cross-license agreement between the companies
• A NAND flash memory supply agreement under which Samsung will provide Seagate with its market-leading semiconductor products for use in Seagate’s enterprise solid state drives (SSDs), solid state hybrid drives and other products
• A disk drive supply agreement under which Seagate will supply disk drives to Samsung for PCs, notebooks and consumer electronics
• Expanded cooperation between the companies to co-develop enterprise storage solutions
• Samsung receiving significant equity ownership in Seagate

The combined value of these transactions and agreements is approximately $1.375 billion USD, which will be paid by Seagate to Samsung in the form of 50% stock and 50% cash.

These transactions and related strategic agreements will enable both companies to better align their current and future product development efforts and roadmaps, accelerate time-to-market for new products and position the companies to better address rapidly evolving opportunities in markets including, but not limited to, mobile computing, cloud computing and solid state storage. In connection with its strategic alliance with Samsung, Seagate expects also to strengthen its relationship with TDK Corporation/SAE Magnetics (H.K.) Ltd. Together, these transactions and agreements broaden a strategic relationship between Seagate and Samsung that began with a joint development agreement announced in August 2010.

“We are pleased to strengthen our strategic relationship with Samsung in a way that better aligns both companies around technologies and products,” said Steve Luczo, Seagate chairman, president and CEO. “With these agreements, we expect to achieve greater scale and deliver a broader range of innovative storage products and solutions to our customers, while facilitating our long-term relationship with Samsung.”

Seagate expects these transactions and agreements to be meaningfully accretive to non-GAAP diluted earnings per share and cash flow within the first full year following the closing, and Seagate does not expect any material restructuring costs in connection with them.

“Delivering value to the market and consumers is the primary goal of the extensive agreement announced today. Samsung looks forward to extending our existing strategic ties with Seagate, to deliver creative technology solutions for a broad diversity of consumer, business and industrial applications,” said Oh-hyun, Kwon, president of the semiconductor business of Samsung Electronics.

The transactions and agreements significantly expand Seagate’s customer access in China and Southeast Asia. In addition, the mutual supply agreements enable Seagate to secure an important source of leading-edge NAND flash supply as the company expands its SSD and solid state hybrid product offerings, and position Seagate to be a more significant supplier of disk drives to Samsung. The agreement also gives Samsung a significant ownership position in Seagate.

Under the terms of the agreement, Samsung will receive consideration consisting of 50% Seagate ordinary shares and 50% cash. Upon closing, Samsung will receive Seagate ordinary shares valued at $687.5 million (45.2 million shares, or approximately 9.6% ownership of Seagate, which is based on Seagate’s 30-day volume weighted average stock price prior to signing), plus $687.5 million in cash. Samsung will have a right to designate a nominee to j oin Seagate’s Board of Directors following closing.

The agreement has no financing contingencies, and is subject to customary closing conditions, including review by U.S. and international regulators. The transactions are expected to close by the end of calendar year 2011.

Morgan Stanley & Co. Incorporated served as financial advisor and Wilson Sonsini Goodrich & Rosati, Professional Corporation served as legal advisor to Seagate in connection with the transaction. Allen & Company LLC served as financial advisor and Paul, Hastings, Janofsky & Walker LLP served as legal advisor to Samsung.
A shareholder agreement under which an executive of Samsung will be nominated to join Seagate’s Board of Directors

[Completely Bonkers]

Big mistake by Samsung. Samsung is the better HDD brand IMO - and Seagate has a tarnished reputation in the consumer segment. I have avoided seagate drives the last 5 years. Samsung therefore dilutes their brand.

Seagate has no SSD... and SSD is the future. So that is one hell of a massive gift to Seagate.

Morgan Stanley are masters of their business to sell this one.

This must have to do with US gvt contracts REQUIRING US supply. So Samsung bought themselves into the US Gvt procurement market.

[n-ster]

I disagree. Apart from the 7200.11 fiasco, Seagate has been great... Samsung may be popular among us techies, but it is a bit less among others. Seagate on the other hand, is very popular, along with Hitachi and WD.

[PHaS3]

Samsung receiving significant equity ownership in Seagate

So... like...

"hey we will swap you some shares for your HDD Division!"

lol...

[kirtar]

meh hopefully they keep the Samsung line at the same quality (or make the Seagate ones match)....

[HalfAHertz]

Samsung don't even need a HDD divison. They were one of the pioneers of SSD tech 2-3 years ago...

[DanTheBanjoman]

Originally Posted by n-ster

I disagree. Apart from the 7200.11 fiasco, Seagate has been great... Samsung may be popular among us techies, but it is a bit less among others. Seagate on the other hand, is very popular, along with Hitachi and WD.

Only techies even know HD brands. The rest of the world population doesn't even know what a HD is. I'm pretty sure average Joe is more likely to know the name Samsung than Seagate.

Though to be fair, I don't have the numbers. Do you?

[PhysXerror]

Originally Posted by DanTheBanjoman

The rest of the world population doesn't even know what a HD is

"Its the beige box that makes it 'go' right?" lol

[n-ster]

Originally Posted by DanTheBanjoman

Only techies even know HD brands. The rest of the world population doesn't even know what a HD is. I'm pretty sure average Joe is more likely to know the name Samsung than Seagate.

Though to be fair, I don't have the numbers. Do you?

Nope, no numbers.

I am not talking about the average Joe, as the average Joe would not need to know HDD brands. but people who want to buy an external Hard drive, or replace/add a HDD to their computer, or are new system builders will do a small amount of research and come up with WD and Seagate most likely.

In my experience, the BIG majority of "average Joe" people who know HDD brands are because of external drives, and WD is #1 in popularity followed by Seagate

[scazbala86]

"Seagate has no SSD..."

Seagate actually does have a line of SSDs. They are primarily targeted at the enterprise sector, but I'm sure its only a matter of time before they begin targeting the consumer sector. This "merger" might just be the start of that. I have used seagate drives for almost 10 years, and have never had one failure. The method of shipping and handling, along with the temperature the drive is operated at have more to do with the chances of failure than anything in most cases.

[DanTheBanjoman]

Originally Posted by n-ster

Nope, no numbers.

I am not talking about the average Joe, as the average Joe would not need to know HDD brands. but people who want to buy an external Hard drive, or replace/add a HDD to their computer, or are new system builders will do a small amount of research and come up with WD and Seagate most likely.

In my experience, the BIG majority of "average Joe" people who know HDD brands are because of external drives, and WD is #1 in popularity followed by Seagate

Average Joe doesn't know HDD brands, that's my point. They know Samsung though, as it's in the top 20 of biggest brand names. So they see WD, Seagate and Samsung and think "hey Samsung, that's the same brand as my TV, so it must be good".

[Arctucas]

I went over to Samsung a couple years ago after my 500G Seagate developed bad sectors after six months and I refused to follow the anal-retentive RMA requirements that Seagate imposed.

The Seagate drive went in the trash, I bought a 500G Samsung.

My Samsung has performed flawlessly.

[DanTheBanjoman]

Originally Posted by Arctucas

I refused to follow the anal-retentive RMA requirements that Seagate imposed.

Which are? Last time I did an RMA to Seagate it was easy and worked fine.

[Thassodar]

Originally Posted by scazbala86

"Seagate has no SSD..."

Seagate actually does have a line of SSDs. They are primarily targeted at the enterprise sector, but I'm sure its only a matter of time before they begin targeting the consumer sector. This "merger" might just be the start of that. I have used seagate drives for almost 10 years, and have never had one failure. The method of shipping and handling, along with the temperature the drive is operated at have more to do with the chances of failure than anything in most cases.

You know what? I will stay away from Seagate refurbs from now on. I had two 500GB Seagate refurbs I spanned together, and I crossed my fingers. But, because they were refurbs I named the drives the Titanic on my PC because I knew they'd sink eventually. Scoot to a month after the warranty ran out, BOOM one of them starts dying.

So I copypasta'd as much as I could to another drive (another Seagate 1.5TB I got for a badass deal) before unspanning them and naming the leftover drive Survivor. The 1.5TB newer Seagate is still running strong but I named it Yamato because that was a Japanese warship that was supposed to be badass and was sunk eventually. My new 2TB Samsung drive I bought this weekend has subsequently been named Nimitz, for the Nimitz class supercarriers.

Long story short: I will not rely on my Seagate drives for anything major.

[Arctucas]

@Dan,

The Seagate RMA CSR I was communicating with via email gave me a link to some special padded shipping box, and said the RMA department would refuse it and return it to me if I did not use their "approved" shipping container.

I checked it out; $15 for their "approved container"!

I argued a little with the CSR, got nowhere, and in the end I just decide to buy the Samsung.

I should probably go buy a couple extra Samsung HDDs, just to have some spares, before those morons at Seagate ruin it.

[Crap Daddy]

The idea is Sammy was apparently losing money on HDD division and that held back their whatever target they have to deliver growth to whatever owners they have. So they found a buyer very quick, this was a rumour not long time ago and sold it. We heard many good things about Samsung HDDs, I own an external e-sata but can't comment now since only time will tell what's gonna happen. On the other hand my Seagate Barracuda 500Gigs is going strong after more than three years so can't complain. As for this merger, buy-out or whatever, it's the way money is made so we better shut up. The sad thing is we will only have 2 major players, WD and Seagate.

[DanTheBanjoman]

Originally Posted by Arctucas

@Dan,

The Seagate RMA CSR I was communicating with via email gave me a link to some special padded shipping box, and said the RMA department would refuse it and return it to me if I did not use their "approved" shipping container.

I checked it out; $15 for their "approved container"!

I argued a little with the CSR, got nowhere, and in the end I just decide to buy the Samsung.

I should probably go buy a couple extra Samsung HDDs, just to have some spares, before those morons at Seagate ruin it.

Why bother speaking to a CSR in the first place? Go to the warranty check thingy, print the nicer paper they generate and ship it. Never had problems with them. In fact, I once got a Quantum disk replaced after they purchased Maxtor. ie years after Maxtor bought Quantum.

[Arctucas]

Originally Posted by DanTheBanjoman

Why bother speaking to a CSR in the first place? Go to the warranty check thingy, print the nicer paper they generate and ship it. Never had problems with them. In fact, I once got a Quantum disk replaced after they purchased Maxtor. ie years after Maxtor bought Quantum.

I believe the email conversation was initiated when I requested a RMA number.

Regardless, I am very satisfied with my Samsung, and have no desire to ever buy Seagate again.

[n-ster]

Originally Posted by DanTheBanjoman

Average Joe doesn't know HDD brands, that's my point. They know Samsung though, as it's in the top 20 of biggest brand names. So they see WD, Seagate and Samsung and think "hey Samsung, that's the same brand as my TV, so it must be good".

My point is that the average Joe doesn't buy HDDs, except Externals sometimes (AFAIK Samsung doesn't have externals) and whenever I ask someone what they prefer as an HDD brand, they mostly say WD (age 16-20 non-techies)

I understand that someone who has little knowledge of anything computer related is probably going to be attracted to Samsung, but these people generally do not buy HDDs

[AndreiD]

Originally Posted by n-ster

My point is that the average Joe doesn't buy HDDs, except Externals sometimes (AFAIK Samsung doesn't have externals) and whenever I ask someone what they prefer as an HDD brand, they mostly say WD (age 16-20 non-techies)

I understand that someone who has little knowledge of anything computer related is probably going to be attracted to Samsung, but these people generally do not buy HDDs

I'm running a Samsung 640 GB external drive right now ; Samsung has quite an extensive line of external HDDs and they're quite good, the Samsung G2 I have is quiet, silent and cool, and it's pretty small (2.5inch)
Yeah, most people I know prefer WD too, out of all of the HDDs I had, Samsung and WD never died on me.

[HalfAHertz]

Originally Posted by n-ster

My point is that the average Joe doesn't buy HDDs, except Externals sometimes (AFAIK Samsung doesn't have externals) and whenever I ask someone what they prefer as an HDD brand, they mostly say WD (age 16-20 non-techies)

I understand that someone who has little knowledge of anything computer related is probably going to be attracted to Samsung, but these people generally do not buy HDDs

I think the main reason WD got to the enthusiast community is because of the Raptor drives. Bringing the faster tech from the corporate world and making it available to the public really helped their image.

On the other hand i think Seagate are still kings in the server world...

[n-ster]

Originally Posted by AndreiD

I'm running a Samsung 640 GB external drive right now ; Samsung has quite an extensive line of external HDDs and they're quite good, the Samsung G2 I have is quiet, silent and cool, and it's pretty small (2.5inch)
Yeah, most people I know prefer WD too, out of all of the HDDs I had, Samsung and WD never died on me.

Now if you compare Samsung vs Seagate GoFlex thingy, I bet Seagate has much more sold

[jsfitz54]

I own two Samsung externals, S2 model's 640GB usb2, small form factor which have been great and two Iomega 1TB usb2 that have Samsung F2 eco drives in them, so far so good.

I have only purchased WD or Samsung for past 5 years.

I hope the quality holds up and the price remains stable.

[laszlo]

all hdd's producers are good; any producer make mistake sometimes and only a few one manage to hide it if is not noticed...;i have hdd's from seagate (even the 500Gb with firmware issue and is working great) samsung and wd and for me they're all good till die;at today's hdd prices nobody can complain they are the cheapest storage solution and prices won't go down further even if ssd will become predominant.

i always managed to get the data back from bad hdd (a bad hhd is not so bad if you know how to revive it) and i don't know if is so easy to do the same with ssd;anyone know ?

[DanTheBanjoman]

Originally Posted by n-ster

My point is that the average Joe doesn't buy HDDs, except Externals sometimes (AFAIK Samsung doesn't have externals) and whenever I ask someone what they prefer as an HDD brand, they mostly say WD (age 16-20 non-techies)

I understand that someone who has little knowledge of anything computer related is probably going to be attracted to Samsung, but these people generally do not buy HDDs

WD does have a decent name in that area yes. I agree to that extend. Though Seagate doesn't.

I have to ask though, how often do you ask random people what HDD brand they prefer? And why do you?