Better news at Seagate…

15 04 2009

There’s lots of pessimism going around but it’s good to see Seagate is finally doing a bit better.

Okay, at first sight it doesn’t look so hot:

  • gross margins are way below (5% off) analyst predictions for the quarter
  • dividends have been suspended
  • share price is slightly down.

But total revenues are up for the compay and the $60m saved on dividend payments can be reinvested. In addition to which an extra £430m was raised to cut overall indebtedness. Things are on the mend.

When the company cut 1,000 jobs last September this was at the tail end of a quarter which saw share price fall by half ($20 to $10 per share). Since hitting a low of $3 in early March, share price has nearly doubled within a month. At present 1,300 people are employed at the company’s Springtown site in Derry.

The global marketplace is fast-changing so local reps need to stay on top of developments at Derry. So what could be the blind spot? What questions could they ask? For example, while prospects look better for the company, the problem might be that Seagate’s sales are strongest in lower-end products (which is why margins suffered a bit). Is there a danger that the company could look more critically at the higher-end, enterprise drive element of its manufacturing operation (parts for which are made in Springtown)? Having invested some tens of millions of dollars at the site, that would seem to be unlikely but recent events there offer cause for concern.

The fact of the matter is that the financial position company is stronger than it had been and there is better than expected demand for Seagate products. So it must follow that the position of those currently in employment here is strengthened as a result.

The figures for this quarter come out on April 21. This would be a great time to reassure the workforce, restate their commitment to the site and restore hours and wages. It is pleasing to see that Seagate has turned a corner and looks healthier than had been the case – shouldn’t the local workforce now benefit from improving conditions?




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