Seagate: Aren't Hard Disks Dead?

Seagate: A Dividend Growth Stock To Buy For 6% Yield

Seagate, as of the most recent dividend increase, pays $1.52 per share on an annualized basis. At the most recent close of $25.10, this represents a 6.05% yield. Further, the dividend has been growing at a fairly rapid clip. At the beginning of 2012, Seagate paid $1.25/share on an annualized basis. Of course, management saw fit to increase the dividend earlier this year to $1.28/share annualized. And, on 11/29, Seagate once again announced another dividend hike to today's $1.52 annualized. This is some very high-powered dividend growth.
Comment: I bought STX back in March. My son and my nieces's husband work there. More on the "Aren't Hard Disks Dead?"

While solid state drives/NAND flash will certainly take the client market by storm with their speed and power-efficiency, for every gigabyte of "bulk" storage that disappears from the actual devices, a gigabyte on a cloud server somewhere needs to be there for the device. That gigabyte probably resides on a hard disk.

Hard disk drives are incredibly cheap on a per-gigabyte basis. While hard disk drives typically cost $0.03 - $0.05 per gigabyte, solid state drives will run from $0.50 - $1.00 per gigabyte. Clearly for a large database or web-server, going pure solid state is not economically viable. Having the two work in tandem - with the hard disk holding the data and a flash solution acting as a cache - is the solution that seems to be working now and what will be working for the foreseeable future.

In the client space, while pure SSDs are certainly gaining traction, the more likely mainstream solution is what we are seeing on many Ultrabooks: hybrid solutions. These solutions either consist of a discrete, usually small solid state drive paired with a large hard disk drive or a hybrid drive that contains both NAND flash built into the same package as the magnetic disk platters. The hybrid solutions are fast and give nearly the same performance as the pure solid state drive products, making them an attractive option for those who want both speed and bulk storage without compromise.

1 comment:

  1. "The Fool" article from 12/1: Is Seagate Destined for Greatness?

    Despite PC market weakness, Seagate's still doing well. Its latest quarterly earnings came in below expectations, and forward projections are also weaker than expected. However, these expectations may simply be sky-high to begin with, as Seagate's current numbers are much better than its year-ago results. Seagate seems well-insulated against the PC industry's woes, thanks in no small part to the increasingly important role of cloud computing to the global software and services industry. Servers need storage, after all.


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