Seagate Warns Disk Drive Demand Continues to Erode

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Seagate

Technology continues to see weakening demand across the disk-drive business, CEO Dave Mosley said Tuesday in a session at the

Goldman Sachs

tech conference in San Francisco.

Two weeks ago, Seagate (ticker: STX) cut its outlook for the fiscal first quarter ending Sept. 30. At that time, the company said it sees revenue for the quarter of $2.1 billion, down from a previous forecast of $2.5 billion, due to weakening trends in China, “more cautious buying behavior” among enterprise and cloud customers, and ongoing macroeconomic uncertainties.

Conditions haven’t improved in recent weeks, Mosley said. He notes that demand in China “continues to erode,” while the company continues to see “more trepidation” from business leaders overall. “Everybody is taking a bit of a pause tactically here,” he said.

Mosley said that the weakness was across the board, with the exception of the very highest capacity drives. “Consumers aren’t helping, and enterprises are being very cautious,” he said. “It is very atypical for this time of year, but we’re going to have to manage through it.”

Asked whether conditions might improve in the December quarter, Mosley said that the drive industry was likely facing a “multi-quarter correction,” but that the outlook will be clearer over the next few weeks. He added that Seagate is pulling back on factory utilization to balance supply and demand. 

Mosley’s comments are consistent with cautionary comments at the same conference one day earlier from

Western Digital

(WDC), which noted that the company has begun to see “caution” from cloud customers, and like Seagate pointed to weakness in China.

Amid a broad downturn in technology shares, Seagate is off 4.2%, to $65.88, while Western Digital is 7.6% lower, to $39.97.

Write to Eric J. Savitz at [email protected]