US disc drive industry suffers further losses

US disc drive industry suffers further losses
Tom Foremski
The US hard drive industry was hit by further warnings of low earnings by major companies as the glut in data storage continues to drive down prices.
Read-Rite, which makes disk drive components, warned that its third fiscal quarter results would result in a loss larger than analyst expectations. And hard drive manufacturer Western Digital said that its fourth fiscal quarter results would be “substantially” below analyst estimates.
Both companies blamed a price war that is driving down prices and profits and too many products on the market.
“Despite the reductions in finished goods inventory that we saw among industry leaders last quarter, there remain too many drives in the distribution channel. This has caused a further acceleration of desktop pricing pressure in the channel and at OEM customers in the June quarter,” said Western Digital CEO Chuck Haggerty.
Western Digital, Seagate and other hard drive manufacturers have been laying off staff and have cut back on production through short work weeks in an effort to reduce the disk drive glut. But Asian competitors, desperate for foreign currency, are continuing to churn out disk drives.

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