Toshiba Corp.’s pending buy of Fujitsu Ltd.’s disk drive business could be a good thing for others in the industry, according to one analyst.
The deal, announced last month, stands to benefit Lake Forest’s Western Digital Corp., which ori-ginally was in the running to buy the business. It also could help Western Dig-ital’s top rival, Seagate Technology LLC.
“I think it’s positive for Seagate and Western Digi-tal,” Richard Kugele, an analyst with Needham & Co. in Boston, said in a research note. “The further consolidation of the industry’s smallest participants should be viewed positively for the U.S. players. Today’s constraints on spending and concerns over demand should lead to improvements in pricing for the survivors and share gains for the strongest.”
The deal stands to make Toshiba the biggest maker of drives used in laptops, with a roughly 30% share, followed by Seagate and Western Digital.
Seagate, the No. 1 overall maker of drives, and No. 2 Western Digital control about 60% of the market for drives used in computers and consumer electronics.
After the deal, Toshiba is set to have about 17% of the total market, roughly even with Japan’s Hitachi Ltd.
The deal also is likely to help stabilize prices, according to Kugele.
“We believe that pricing in notebooks should see some level of stabilization with one less player at the table,” he said. “You will have one less player coming in and trying to bid for volume.”
Drive makers have been struggling with a slowdown in demand from computer makers and consumers that has led to an oversupply and falling prices.
Toshiba and Fujitsu, both based in Tokyo, haven’t agreed on a price yet. It’s set to be hashed out next month.
The long-rumored Toshiba and Fujitsu deal is set to create a venture that is 80% owned by Toshiba and 20% by Fujitsu, with Toshiba eventually upping its stake to 100%.
What to pay for the business proved a sticking point for Western Digital, which came close to buying the business in December before backing out.
Western Digital had sought the Fujitsu business to boost its share of drives used in laptops.
A buy would have doubled Western Digital’s laptop share to 30% and put it ahead of Seagate in that segment.
Toshiba is set to get drive plants in Thailand and the Philippines, as well as Fujitsu’s sales force and research and development group.
Remaining parts of Fujitsu’s disk drive business, including a plant in Japan, likely are to be sold to others, Kugele said.
Fujitsu originally was looking to get $660 million to $945 million for its drive business.
It’s likely that Toshiba is going to pay roughly half that, with some estimates pegged at $334 million to $435 million, Kugele said.
The deal, expected to close in June, is viewed by some as a kickoff to more consolidation.
Counting Employment
Kofax PLC, a British maker of software that helps businesses cut down on paper, landed a contract with the U.S. Census Bureau.
Kofax, which has its operational headquarters in Irvine, will help the government organize millions of pages of employment applications and background materials per year, the company said.
The deal is set to generate some $300,000 in revenue, according to Kofax.
The company makes scanning software used by businesses to get rid of paper and speed up work productivity.
The software collects forms, invoices, other paper documents, e-mail and photos and organizes them into a searchable database of electronic files.
“There is increasing demand for government agencies and organizations to transition from traditional paper-based systems to automated document processes that are efficient, reliable and highly secure, particularly for sensitive paper,” said Andrew Pery, marketing chief for Kofax.
The company, which got its start in Irvine in 1985, has 365 workers here and some 1,200 in all.
Customers include Wells Fargo & Co., FedEx Corp., Colgate-Palmolive Co., Allstate Corp. and government agencies.
For the six months through December, Kofax reported roughly $130 million in sales.
New Marketing Chief
Aliso Viejo’s UST Global Inc., which provides custom software services, outsourcing and consulting for big companies, added another industry veteran to its ranks.
UST said it hired Stephanie Moore as marketing chief.
Moore spent more than a dozen years as vice president and principal analyst at Cambridge, Mass.-based Forrester Research Inc., a publicly traded market research and technology analysis company that had a recent market value of about $400 million.
Moore is viewed by many as an expert on global sourcing issues and technology.
She often is quoted in publications such as CIO Magazine, New York Times, Wall Street Journal, USA Today and Computerworld.
Among her more usual marketing duties, Moore has been tapped by UST to launch a series of online seminars sharing her expertise in specific areas of business operations.
UST Global has been readying to go public, possibly in 2010.
The company has formed an executive committee of public company veterans and hired a consulting company to help it get into compliance with the Sarbanes-Oxley Act and other public company regulations.
It’s also been slowly adding to its executive ranks and shoring up it’s accounting practices, including adopting corporate governance norms, implementing accounting standards and rolling out an employee stock option program.
