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History (1999): Maxtor Suffers From Falling Prices

Consequently losses between $23 and $33 million

The pricing environment has deteriorated significantly from what we saw earlier this quarter,” said Maxtor’s CEO Mike Cannon at mid-June. “As we reviewed results from the second month of the quarter, it became evident that the decline in pricing will be significantly greater than we anticipated in April. Our unit shipments and revenue will also be lower than we had expected, as we take the appropriate steps to cut back our production and limit our participation in the channels in which pricing declines are the most problematic.

As a result, Maxtor, which has been profitable each quarter for the past year, and which had hoped for a profitable 2Q99, ended in June, will post losses between $23 and $33 million.

Is this the end of this particular success story? In the current pricing war, which affects nearly all lines of HDDs, desktop IDE units are particularly hard hit by Seagate’s blitz campaign, with a 4GB U4 for less than $90 that has enjoyed considerable success as probably the first HDD sold for under $100. Maxtor and Quantum are having a hard time keeping pace.

This article is an abstract of news published on issue 138 on July 1999 from the former paper version of Computer Data Storage Newsletter.