The Biggest Risks Facing Seagate Technology

In this video, Motley Fool analysts Jim Mueller and Andrew Tonner discuss the risks associated with Seagate Technology (NASDAQ: STX  ) .

Jim first tells us that one of the risks is related to stock-based compensation. Seagate's goal is to reduce its share count over the next two years from 400 million to 250 million.

The second problem Jim focuses on is price erosion. Consumers expect product prices to fall as costs decrease, but as one of the dominant names in its industry, it does have some power to slow down the price drops.

Finally, Jim focuses on the threat to Seagate from the latest solid-state drive technology. It represents a very small part of the market and is relatively expensive, but it does have advantages, and Seagate needs to keep an eye on any unfolding trends.

While Seagate Technology pays a significant and growing dividend and seems able to generate the cash flow to support it, a global slowdown in demand for digital memory storage has begun to put pressure on margins. Jim discusses some of the risks and threats associated with Seagate, but is the company worthy of your investment consideration? The Motley Fool answers this question and more in our most in-depth Seagate research available for smart investors like you. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.


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  • Report this Comment On January 03, 2013, at 11:50 AM, gainerrs wrote:

    Why does FIO fluctuate so wildly when there is no news on the stock? It seems to move disproportionally to its price - usually contrary to the rest of the market.

    Thanks.

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