Seagate: CEO Luczo Says Drive Market Still Contracting

Seagate (STX) CEO Steve Luczo this afternoon said a sharp dropoff in demand in December as the PC market weakened was the primary reason for the company’s larger-than-expected December-quarter loss.

In an interview with Tech Trader Daily, Luczo said the company’s total addressable market appeared to be in the 150 million unit range entering the quarter, and still appeared to be that large well into November. But he says that starting in the back half of that month, demand began to crumble: He thinks the TAM dropped to about 123 million drives. (That’s down from an estimated 150 million to 152 million in the September quarter.) He says customers began reducing inventory as end-user demand sagged; that in turn triggered a more aggressive pricing environment. Luczo says that in many markets Seagate serves, this has been “the steepest and longest” pricing decline in the history of the industry.

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