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Seagate Technology Plc

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Seagate is the second-largest manufacturer of hard disk drives (HDDs) in the U.S. We note that the merger between Western Digital and SanDisk has made it more challenging for Seagate to capture market share in the newer storage technology – SSD. Customer concentration is a major risk for Seagate, as the loss of a single order or customer affects the operating performance significantly. The disk drive market is highly competitive and has experienced drastic pricing pressure due to supply/demand volatility. The situation may compel Seagate to slash hard disk prices, in turn hurting margins. Estimates have moved south lately ahead of the company’s Q2 earnings release. However, synergies from acquisitions and product innovations remains a tailwind.

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