Note: This didn’t happen. It was merely a rumor.
The stock market was alive with rumors that Seagate might be bought by an unnamed Chinese company, as reported in the New York Times, among others. This comes after a week of insider whispers about a possible tieup between Seagate and memory-makers, Micron or SanDisk, itself a Seagate spin-off. It seems that the hot disk drive and flash memory markets are shaking as sales heat up and margins thin out. Note that this is far from a done-deal. Rather, Seagate CEO, William Watkins, was merely noting in an interview that there was such an inquiry.
To my eyes, a Seagate buy-out would be little different from the sale of IBM’s disk drive operations to Hitachi back in 2002 or their sale of the PC group to Lenovo two years later. Seagate is a component maker, and although it is a critical piece of the storage industry it is not really a strategic entity. Certainly, the company’s contributions to standards like SATA, SAS, and (yes) hybrid drives are worthwhile, but apart from evault, the company contributes little to the value-added services landscape.
Still, if a buy-out softened scrappy Seagate I would miss the healthy contribution between them, Western Digital, Hitachi, and the other disk vendors. And it would be an end of an era, with Alan Shugart‘s old company going the way of MG Rover and the rest.
It really was a news fest. However, the multiple articles that headlined that a Chinese company was interested in buying Seagate were all based on an interview with Watkins that was carried in the N.Y. Times last Thursday. If one read the article carefully, Watkins did not specifically say that Seagate was the company the Chinese interests were pursuing. Then he went on to say that though Seagate was not for sale, it would be difficult to fend off a high bid. It was all a bit confusing but I have a confirmation that Watkins is telling analysts today that he was misquoted.
If a Chinese company is interested in buying a U.S. drive maker (if not Seagate then has to be WDC) and I were placing bets, I would bet that this would be squelched. I don’t think the Chinese want to face off the kind of U.S. vitriolic response that accompanied the Lenovo deal at this point in time. I suspect they are still too heavily engaged in repairing the negative PR their exports have garnered lately (lead paint on toys, tainted dog kibble, etc.) They would be content to bide their time, something that, in my experience, Chinese b usiness leaders do exceptionally well.
By the way, I very much enjoy your blog(s)
It really was a news fest. However, the multiple articles that headlined that a Chinese company was interested in buying Seagate were all based on an interview with Watkins that was carried in the N.Y. Times last Thursday. If one read the article carefully, Watkins did not specifically say that Seagate was the company the Chinese interests were pursuing. Then he went on to say that though Seagate was not for sale, it would be difficult to fend off a high bid. It was all a bit confusing but I have a confirmation that Watkins is telling analysts today that he was misquoted.
If a Chinese company is interested in buying a U.S. drive maker (if not Seagate then has to be WDC) and I were placing bets, I would bet that this would be squelched. I don’t think the Chinese want to face off the kind of U.S. vitriolic response that accompanied the Lenovo deal at this point in time. I suspect they are still too heavily engaged in repairing the negative PR their exports have garnered lately (lead paint on toys, tainted dog kibble, etc.) They would be content to bide their time, something that, in my experience, Chinese b usiness leaders do exceptionally well.
By the way, I very much enjoy your blog(s)