Despite a 24 percent drop in revenue and a 66 percent plunge in net income during the fiscal fourth quarter, hard-disk drive maker Seagate Technology will continue developing a $180 million R&D facility in Fremont, Calif.
In an interview with Dice News, spokesperson Brian Ziel said the company will transfer about 500 recording-media engineers, researchers and technicians from an existing facility in the city within the next 12 to 18 months. Although media reports indicate an additional 100 people may be added to those, Jon Piazza, Senior Manager of Corporate Communications, told us that it was “too early to predict how many new hires there will be, and it’s certainly too early to predict the types of positions they will fill.”
Seagate currently has about 53,000 employees worldwide, most of them in Asia-Pacific manufacturing plants. That’s down from about 58,000 in June 2012.
In some ways, Seagate’s numbers may not be as bad as they first appear. Nehal Chokshi, Senior Analyst at Technology Insights Research, said the drop in revenue was expected, since last year PC OEMs had to catch up on inventory losses caused by flooding in Thailand. Those losses severely impacted HDD availability from September 2011 to around March 2012. Currently, Chokshi says, all indications are “that actual demand for HDD products is healthy.”
Lackluster PC demand has long impacted Seagate and its competitors. However, Chokshi predicts better times ahead. The company is rolling out the next generation of HDD technology, ranging from perpendicular magnetic recording (PMR) to heat-assisted magnetic recording (HAMR). At the same time, it’s continuing to improve its SSD product lineup. Chokshi also sees signs of the PC industry stabilizing, especially since few new entrants are coming in to cannibalize the market. He expects to see modest, single-digit growth beginning toward the end of the year. That compares favorably with the 10 percent year-on-year drop seen in the quarter that ended in June.
While Chokshi hasn’t heard definitive news of hiring at Seagate, he does note that the possibility of 100 or so new hires would translate to an additional $20 to $25 million a year in expenses, including overhead. “We project R&D costs will increase $30 million of incremental R&D costs in fiscal year 2014 versus fiscal year 2013,” he says. “So this plan for R&D hiring is certainly within the budget of Wall Street forecasts.”