There's just no end to the bad news for Seagate (NYSE:STX).

Yesterday, the ailing disk drive maker reported $2.3 billion in second-quarter revenue, down nearly one-third from last year's $3.42 billion. Per-share earnings swung to a $1.02 loss from a $0.73 gain in the year-ago quarter. More than $380 million in write-offs and acquisition and restructuring charges contributed to the free fall.

And it may be what cost Bill Watkins the top job. Even so, investors don't see new management, led by incumbent chairman and new CEO Stephen Luczo, doing much better, even if he's been involved in earlier turnarounds at Seagate; following Seagate's announcement, shares dropped by more than 15% and haven't recovered since.

"[Seagate] is a prime candidate for bankruptcy," wrote CAPS All-Star dividendgrowth in response to my recent article about the company. He may be right. Seagate's problems aren't merely born of a temporary drop in demand.

When an innovator doesn't innovate
But demand is dropping. Luczo told analysts in a conference call that the pricing environment in the last quarter kept with trends from earlier months in 2008, which he said were some of the worst in the company's history.

A short-term recovery isn't likely in the offing. Seagate has suffered a rash of failures of its higher-end Barracuda drives and is offering free data recovery to those afflicted. Management will pay for that and other ongoing restructuring efforts by shaving costs, like Seagate's dividend, for example. The board approved a 75% cut to just $0.03 per share quarterly.

Maybe that'll help for a while. Trouble is, the disk drive industry is in the midst of an upheaval. Solid-state drives from Intel (NASDAQ:INTC), Samsung, and SanDisk (NASDAQ:SNDK) are the disrupters; they're becoming more affordable with each passing day. Already, Apple (NASDAQ:AAPL) and Sony (NYSE:SNE) have equipped high-end laptops with SSDs. Seagate has yet to take advantage of this opportunity.

Luczo, meanwhile, told analysts that he's committed to returning Seagate to profitability over the long run.

Glad to hear it, sir. If you're serious, there's one very easy (yet also difficult) way to show it: Boost research spending now. Invent the next great drive technology. The one that'll make today's solid-state innovators look like tomorrow's data storage lightweights.

The market has left you with no other choice.

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Fool contributor Tim Beyers had stock and options positions in Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy has no juicy bankruptcy stories. Sorry.