Posted on 12/21/2005 10:43:52 AM PST by ShadowAce
NEW YORK (Reuters) - Seagate Technology (NYSE:STX - news) on Wednesday said it would buy rival computer disk-drive maker Maxtor Corp. (NYSE:MXO - news) for $1.9 billion in stock, aiming to cut combined costs and drive development of new products.
In the deal, expected to be completed in the second half of 2006, Maxtor shareholders will receive 0.37 shares of Seagate common stock for each Maxtor share they own.
At current prices, the transaction is worth about $7.25 a share for Maxtor investors, a premium of more than 60 percent to its closing price on Tuesday. Maxtor's stock has not traded in that range since June 2004.
Maxtor shares rose 52 percent in premarket trade, according to Inet.
Seagate shareholders will own about 84 percent and Maxtor shareholders about 16 percent of the new combined company.
The combination is expected to add 10 to 20 percent to Seagate's cash earnings per share after the first full year of joint operations, Seagate said in a release.
It also expects to hit $300 million of annual operating expense savings after the first full year of the combination.
Seagate said its executive management team will continue to serve in their current roles and the combined company will retain the Seagate name.
The deal comes as Maxtor, whose biggest customer is No. 1 personal computer maker Dell Inc. (Nasdaq:DELL - news), has been restructuring and battling increasingly stiff competition.
Analysts have said Maxtor has been losing market share to competitors like Seagate and Western Digital Corp. (NYSE:WDC - news) in consumer electronics, one of the fastest-growing businesses for computer storage companies.
"With the increased scale of the combined company, we can reduce overall product costs and provide more innovative products at more competitive prices," Bill Watkins, Seagate's chief executive, said in a statement.
Seagate also backed its earlier outlook for its second fiscal quarter of $2.2 billion in revenue and earnings per share in the range of 53 cents to 57 cents.
Seagate shares were not trading premarket, according to Inet. Maxtor shares rose $2.36 to $6.88.
There's got to be a way to spin this to badmouth President Bush, or free enterprise, or international trade. There's just got to be.
LOL!
I like both companies... not sure how to take this.
Maxtor helped drive prices down. Seagate was slow and overpriced.
Probably just lead to higher drive prices. It will be interesting to see what WD does.
Bush is a whore these big hard drive cartels. Now the big hard drive companies are a total monopoly. These are the hard drives used in those Diebold machines used to steal last elections. Slimey Bush.
Ummm... Seagate slow? remember the Cheetah 15K? also their Savvio 10K.1 isnt to shabby.
In my 20 years of computer experience, I have had the best results with Western Digital disk drives. I have replaced more failed Maxtor and Seagate disk drives than any other brands. IBM used to be good too. Don't know if they are since their disk drive division was bought by Hitachi.
And which IDE cable do I buy to hook these buggers up?
I would say that Maxtor scsi's are slow but the Seagates like to break.
I'm just not a happy guy ;-)
Got a bunch of Maxtor 250 G drives....they run great for me.....
"Maxtor shares rose $2.36 to $6.88."
This article would have been of more value yesterday! I always find out 24 hours too late!!!
I wouldnt mind getting a few of those 300GB maxtors what are they called diamond max 10's?
I'll bet Martha got a tip.
Oh yeah, George Clooney is already working on the script for a new movie: "Giant Magneto-Resistiana". One particularly telling line from a character in the script: Areal density is our protection. Areal density keeps us safe and warm. Areal density is why we win. From the players brokering back-room deals in Washington to the men toiling in the assembly plants of Mexico, the script's multiple storylines weave together to illuminate the human consequences of the fierce pursuit of sector caching and platter counts.
Good discussion on Slashdot on this today - One guy was saying that he liked this drive because they never died and hated this drive because they always died etc. etc.
Someone else came along and said that's not the way to look at it. Hard drives WILL fail eventually - the only solution is to back up your data and plan for that failure. No point in putting your faith in a superstition that X drive never fails.
Also another poster pointed out that look at the warranties that come with the drives. I think it was Seagate that came with a 5 year warranty (don't quote me on that) versus maybe a Maxtor that came with a 1 year warranty. But warranty length is a good indicator.
But in the end, you must back up your data. In fact one poster said that HD's are like toilet paper - disposable items that you plan on getting rid of. (If HD's are like toilet paper, then what is your data? He didnt' say.)
I once got a new computer with a 20 GB Seagate hard drive that was DOA.
Who cares. I use a Western Digital WD800JB 80 GB 7200 rpm ATA-100 drive on my desktop machine and the drive is quiet and fast.
You have a long memory!
I have 6 IBM/Hitachi 2.5" laptop drives laying in a junk pile from this past year and another one being tested right now that is sure to join them.
IBM unloading a sorry divison to Hitachi.
My first hard drive was a Seagate 20MB MFM that I purchased to cram into riginal Compag luggable. We hooked it up to a WD RLL controller and got it to format out at 30MB which made me a pretty heavy hitter back in those days.
Always loved Whole Foods. Check out the five year performance on this sucker:
It's always been an incredibly underrated security. No one really ever talks about it (that I know of, anyway).
wow
I've had just the opposite experience.
Maxtor was always top notch for me and Seagate always caused problems.
Although I will say I just returned a 120gig Seagate hard disk for replacement and it took all of 6 days to complete the replacement cycle. Impressive. :-)
But on the bad side, their distribution point is McAllen, Texas and they do have facilities in Mexico just across the Texas line which lends to a few raised eyebrows.
Hard drives. Bah!
Three thousand two hundred bucks for 20 Megabytes.
"Three thousand two hundred bucks for 20 Megabytes."
Was this back in 1983 or 1984? Just curious.
Here's a nice flashback:
"The cost for 128 kilobytes of memory will fall below $100 in the near future."
Creative Computing magazine
December 1981, Page 6
[ At $100 for 128 kilobytes, the price of 256 megabytes comes to $200,000. ]
Late '84 as I recall. Is it still workin' for ya?
My first HD was a 10MB Seagate hardcard that plugged into an ISA? slot.
The most reliable HD I had was a Quantum Bigfoot 5-1/4 hard drive.
Anyone remember Micropolis drives?
Yeah--I remember the brand name, but I never owned one.
Would that be hard-sectored?
Yup, it ain't if it's gonna fail, it's when.
Funny stuff but the fellow down the road goes through Seagates like beer while I've had 32 Seagate 10k and 15k drives running full time, some for nearly five years and only one failure during that time.
Ditto the Seagate and WD drives we use in workstations. They get too small before they fail. I did go with Maxtor SATA for the last two boxes but it's too soon to tell how they'll work out.
I expect there's probably some variable; I've noticed his machine room is awfully warm or if not that air flow but whatever I've had great luck with hard drive but then I grew up in a big machine environment and and keep things cold.
Well, except for the original AT hard drive. You could have kept it at 40 degrees and looked at it wrong and it'd die.
In my experience, I have had three drives fail. All three were Maxtors. Small sample size, but I don't use their crap any more.
One of the posts on slashdot mentioned particular "lots" of HD's as potentially being bad - no reason to think this might not be true.
Another thing that's always seemed to me is that a quiet drive is a happy drive - once the thing starts making itself heard things are likely to go from bad to worse.
I had a DVR that kept crashing on me that was loud as heck. TW replaced it with a newer model that is quiet as a mouse and stable as a rock.
That about sums it up.
I've had one Seagate and two Maxtor drives crash on me. I use mostly Western Digitals and only had one (real old 6G) that I couldn't trust with data -- but they never crashed. And a couple of Quantum Fireballs (10 and 20 GB) still in service with no problems.
And I run these things 24/7/365.
Very true. A slight flaw in the manufacturing process (a degree of temp. off, a slight miscalculation in the media formula, etc.) can cause all sorts of problems.
No question noisy bearings or stepper motor are a sure sign something is probably amiss. Something starts squealing later on in it's life I'd be prone to toss it before it outright dies.
That said a couple of times I have had new drives that were "tight" but after exercising with programs like Spinrite turned out okay. So far it's only been notebook drives that have done this.
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