Hard disk drive manufacturers Maxtor and Western Digital both issued profit warnings to the stock market last week as each continued to suffer from the price war raging in the sector.
Maxtor announced that it is expecting to record a loss of between $23 million and $33 million for the second quarter of this year, while Western Digital claimed the operating loss for the quarter ending 3 July will be in the range of $0.90 to $0.98 per share.
Shares in Maxtor have dropped 88 cents to $4.50 on the Nasdaq exchange following the announcement, while Western Digital's stocks fell 38 cents to $6.50 on the New York Stock Exchange.
Both companies cited the 'extremely aggressive' pricing in the desktop drive market as the reason behind the forthcoming losses and are cutting back on production to avoid excess inventories and aggravating the price war.
'It has become evident that the decline in pricing will be significantly greater than we anticipated in April,' said Mike Cannon, president and chief executive of Maxtor.
Chuck Haggerty, chairman and chief executive of Western Digital, said: 'Competitive pricing has been much more aggressive than we expected this quarter.'
Earlier this month, rival Quantum also posted a first-quarter profit warning, admitting that earnings per share would only be in range of $0.05 to $0.15 for the quarter ending 27 June. Aggressive pricing was once again blamed for the reduced revenues and profits.
Hard drive giant Seagate has only recently returned to profit following a massive restructure last year designed specifically to combat excess inventories and falling prices (PC Dealer, 21 April).
The latest report from Disktrend, has predicted that market conditions will ease towards the end of this year. Revenue is set to increase by 7.7 per cent on a 16.1 per cent increase in unit shipments, as manufacturers start to put their profit before market share. The report also predicted revenue and shipment growth continuing.
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