It is time for the CEO to be gone. We all knew this day would come of massive change to demand and the quick decline of HDD. This CEO will be the joke of MBA business cases for years to come for not having a strategy to mitigate this decline with growth businesses. Instead he doubled down on hamr and spent many billions on it while dismissing all new ideas presented to him. Board, it is time to act.
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Sharks with freaking laser beams attached to their heads >> Hamr
Keep an eye out for ValueAct Holdings. They own about $1B of STX at the current price at an average price of $39.45. Not much of a return for 6 years of participation at the company. They will be driving the change to the company, not the CEO, including trying to sell it. Once sold then the company will truly have cuts.
We all knew SSD was eventually going to displace the HDD. We got a little spoiled by the chip shortage the last couple of years. If the 30TB HAMR drive fails the company as it is now is a goner rather quickly. It’s not looking good. It can still survive making legacy 20TB drives as a stripped down small business perhaps. Even the 30TB I’m told has a higher TCO and might only buy a short amount of time.
NAND is cheap the next quarters at least which makes HDD too expensive for all the drawbacks. STX at $8b of revenue in a year cannot pay the dividend. We know the dividend will not be cut so 3-5k admin jobs have to go including BS jobs like business excellence, chief of staff, half of VPs, half of directors.
Lyve cloud full of new 30TB HAMR drives is gonna save us all!
Of course Seagate will be fine. Anytime it is threatened because the world consumes fewer drives, it just has to lay off more of us to restore the balance...
Let's not forget, the only tangible decisions this management team has ever made was managing the debt, stock repurchase and the dividend. All their decision-making has nothing to do with sustaining this company for generations and everything about milking the cash machine until they decide to unload it. That is where I do agree with the theory that any cloud investments were simply part of the strategy to sustain stock price. That is the only thing keeping the CEO up at night, not the thousands of good paying jobs that get slashed at the first downturn in years. If they want HAMR to succeed, this is not the right time to be gouging the engineering groups involved but that is clearly not driving their decisions lately (cut staff, retain the dividend.)
You make it sound so simple, software...yeah....that's the ticket! Except how many true software companies out there are already trying to find the next ki---r app? Exactly how is STX supposed to magically enter the software market as a serious player with a return in billions? They had some software in the past that had a base (Veritas) but only used that to engineer a buyout to go private during the tech bubble.
If anything, the fact they kept buying cloud companies that went nowhere is more an indictment of their sales and marketing teams than any strategic plans by executives (although I do agree it was also a mask for the stock analysts). They had the product and couldn't figure out how to compete with big cloud hardware/software providers.
Lidar was supposed to be a game changer due to it's relatively low cost but now that seems to be going nowhere. Again....they have product but can't seem to sell it or even find a partner to work with. My gut sense is they are trying to sell it but since this management team always defaults to the cheapest possible, they probably have a mickey mouse team trying to make the sales.
HAMR, Xyratex, Dot Hill, and other "stuff" wasn't to snow the BoD, it was to convince stock analysts that Seagate had something in the tank for the future, i.e. to keep the stock price high.
The truth is, Seagate management has absolutely no ability to adapt the company to any business other than HDDs.
So many ideas have been presented related to cloud computing and he just doubled down on HDD. The board fell for the hamr scam. Imagine the billions spent on hamr, dot hill, xyratex, and other cr-p (insert business excellence joke here) that could have been spent on almost anything else like software. At least $5B wasted!
What new ideas?