Things are looking better for Lake Forest-based disk drive maker Western Digital Corp.,at least on the competitive front.
Two weeks ago, Milpitas-based Maxtor Corp. said Paul Tufano resigned as chief executive, president and acting chief financial officer.
Maxtor didn’t provide any details about Tufano’s departure, which came a month after Michael Bless quit as chief financial officer. Bless had been on the job for just two months.
Financial Web site The Motley Fool called Maxtor a “rudderless ship.”
Maxtor quietly has been ceding ground to Scotts Valley-based Seagate Technology and Western Digital.
Drive makers have been mired in a slump, with oversupply one of the key problems.
And weak drive sales to desktop computer makers could lead to a sluggish 2% growth rate for drive makers through 2008, according to a recent report from Merrill Lynch & Co. analyst Shebly Seyrafi.
Drive sales to computer makers “are tracking somewhat less than originally expected,” Seyrafi wrote, due to weak consumer demand for PCs.
The market for drives for servers and other business computers is seen as somewhat better, with prices rising, Seyrafi said.
Western Digital jumped back into the market for laptop computer drives in the fall. Western Digital made mobile drives in the early 1990s but exited the market by 1997 amid competition from IBM Corp. and Toshiba Corp., which made drives for their own portable computers.
While Seagate and Maxtor have cut hundreds of jobs in the past year, Western Digital bulked up with last year’s buy of some of the assets of Read-Rite.
For the quarter ended Oct. 1, Western Digital posted operating income of $30 million, up more than six-fold from a year earlier. Sales rose 15% to $824 million. But during its earnings conference call, Western Digital gave a lukewarm earnings outlook for the January quarter.
Closing the Deal
Irvine-based Gateway Inc. is close to signing a computer sale pact with the state of Nevada.
Lawmakers there voted a few weeks ago to buy about 100 laptop computers for their 2005 legislative session.
But, it “depends on whether the company can provide the network needed for lawmakers and staff to operate the computers,” according to a story in the Las Vegas Review Journal.
If the company can’t, the contract will go to competitor IBM.
A hundred laptops is small potatoes. But every little bit helps when you’re trying to grab market share, right?
Recent numbers from brokerage Morgan Stanley showed that Gateway, which recently moved to Irvine from Poway in San Diego, took market share from Hewlett-Packard Co. in the third quarter.
That prompted Morgan Stanley to downgrade HP’s shares in October amid increased competition. HP has lost “several points” of PC market share, mostly to Gateway, the October report said.
Meanwhile, Gateway said last week that it is making its first sales foray into Mexico, where it will sell computers under its eMachines name.
Wayne Inouye, Gateway’s chief executive, is looking to turn around the computer maker. He became Gateway’s boss after the company bought eMachines Inc. of Irvine in March.
Inouye had managed to right eMachines by boosting quality and running a lean operation.
Avamar Lands Patent
Irvine-based Avamar Technologies Inc. nabbed a second patent for its data processing software.
Avamar makes software that lets businesses easily back up large amounts of data without “tying up the pipes” of storage networks. Company officials say its software is a cheaper, more efficient way for banks, government agencies and others to back up data.
Avamar says its software cuts storage and bandwidth requirements by some 99% for companies protecting their daily data.
“Traditional tape backup creates tremendous data redundancy in order to protect primary data stores,” said Kevin Daly, the company’s chief executive. “With tape systems, enterprises usually generate full copies of data on a weekly basis and partial or incremental copies of data on all intervening days. As a result, companies often have to pay for managing and storing a 10-fold expansion of their primary data on their tape backup systems.”
Avamar closed a $15 million round of venture funding in October. Avamar said the funding round was oversubscribed.
Backers have some big names. Morgan Stanley Venture Partners led the recent funding. Prior investors Lightspeed Venture Partners, Goldman Sachs Group, Benchmark Capital and CMGI@Ventures also took part.
Pact Lacks Punch
Santa Ana-based Powerwave Technologies Inc. recently said that it inked a deal with Britain’s Vodafone PLC to provide power supply gear to the phone company’s global units.
Seems like a big deal with a top wireless company. Strangely, Powerwave got little bounce on Wall Street following the announcement.
No value was given for the deal.
Shares of the power amplifier maker are off 31% from their 52-week high.
