Morningstar Rating

Stock Research and Analysis

by Peter Wahlstrom, CFA

Bulls Say

Future areal density gains and cost reductions should allow Seagate to maintain margin levels that will allow its robust free cash flow to continue at almost all points of the industry cycle.
The amount of information requiring storage is growing rapidly, which should continue to fuel demand for storage for years to come.
Recent industry consolidation could lead to greater long-run pricing power and, in turn, higher gross margins over the cycle. Read more 

Bears Say

The acquisition of Hitachi's hard drive unit gives Western Digital a major presence in the mission-critical enterprise segment, an area Seagate has long dominated. This combination poses the biggest threat Seagate has ever faced to its most profitable segment.
Hard-drive prices are continually declining, which places significant pressure on manufacturers to continually innovate and cut manufacturing costs.
Solid-state drives pose a long-run threat to the HDD manufacturers' business models, and Seagate's strategy to take share in the SSD market could face hurdles. Read more 

Management

Overall we view Seagate's stewardship of shareholder capital as standard. Chairman Stephen Luczo, who was CEO from 1998 through 2004, resumed leadership of the company in January 2009. Management has extensive industry experience, and Seagate's ability   Read more 

Profile

Since 1979, Seagate Technology has designed and manufactured hard disk drives used for storing electronic information. Hard drives are used in servers, PCs, laptops, and   Read more 

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