Q&A: Seagate CEO talks about the Maxtor acquisition
Bill Watkins says Maxtor brings with it good manufacturing facilities and engineers
Computerworld - In a surprise move today, Seagate Technology announced that it has struck a deal to purchase its chief competitor in the hard disk drive manufacturing market, Maxtor Corp. Bill Watkins, president and CEO of Seagate Technology, spoke with Computerworld after the $1.9 billion deal was announced about what technology Maxtor brings to the table and what the merger will mean for both companies (see "Seagate to buy Maxtor for $1.9B in stock").
Will this result in layoffs at Maxtor and Seagate? Yes.
Layoffs at both companies or just at Maxtor? You could make the argument it might be more on their side. But it's too early for us to tell you who's going to go.
What does Maxtor bring to the table considering this is a company that has been losing money? After doing due diligence, [we found] they're in better shape than most people realize. Historically, when deals have been done in this industry, people have gone out to acquire some sort of product road map, technology or specific business. This is not what this is about. We're very comfortable with our product road map and very comfortable with our manufacturing and platforms and strategy. This is really about bringing over the Maxtor revenue and leveraging it through our infrastructure. We get tremendous scale of value from that.
On the gross margin side, as we layer this revenue over our fixed cost, we get an efficiency there. If you look at the [operating expenditures], we believe in the combined company we can eliminate about $300 million in expense, getting tremendous leverage out of our engineering resources. One way to think about this is, in a sense, we're buying revenue and leveraging it through our operating matrix.
Where will this $300 million in savings come from? I believe I can run the combined company with about 25% more spending than I currently do at Seagate.
When do you expect to see this deal close? I think it's going to be in the second half of calendar year 2006. I expect six to nine months.
What other value is there in this deal? There are some assets we think are valuable over there. Their China facilities, their media facilities we feel are both state of the art and are capable of going forward with perpendicular [recording technology]. We believe they have a very good brand in that space. I think from an additional engineering resources perspective, they have some good people that we can bring on.
You're already developing perpendicular technology. How does Maxtor bring that to the table for you? They
- Silicon Valley's 19 Coolest Places to Work
- Is Windows 8 Development Worth the Trouble?
- 8 Books Every IT Leader Should Read This Year
- 10 Hot Hadoop Startups to Watch
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- Data Warehouse Augmentation: The Queryable Data Store While organizations have, to date, been busy exploring and experimenting, they are now beginning to focus on using big data technologies to solve...
- Rebranded Quadmark revamps its IT solutions with Google Apps Switching to Google Apps halved Quadmark's IT admin costs while achieving 10% time savings per employee. The global consulting firm now spends 80%...
- CrashPlan PROe Security Because mobile laptops often are connected to unsecured networks, a very high standard of security is required to ensure privacy.
- Protecting Digitalized Assets in Healthcare Healthcare providers face an urgent, internal battle every day: security and compliance versus productivity and service. For most healthcare organizations, the fight is...
- Live Webcast LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users?
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users?
- Make or Break: New Auto Products Must Go To Market On Time This Webcast quantifies the value of time to market for the auto industry and highlights how Primavera Enterprise Portfolio Management can help organizations. All Data Storage White Papers | Webcasts