Seagate Begins Rebuilding Itself with Chief Executive Change

Seagate Replaces CEO with Ex-CEO Ahead of New Series of Reforms

by Anton Shilov
01/13/2009 | 02:30 PM

Seagate Technology, the world’s largest maker of hard disk drives, has announced resignation of the company’s current chief executive officer and president and appointment of the new chief exec and president. Apparently, the new CEO is not particularly new: he already was the head of the company during the tough times in 2001 and 2002. The appointment of the new chief executive may be an indicator of major restructuring of the firm.


The board of directors has unanimously appointed Stephen J. Luczo, the company’s chairman, as president and chief executive officer, effective immediately. Mr. Luczo will continue to serve as chairman of the board of directors. Mr. Luczo, who used to be chief executive of Seagate Technology from 1998 to 2004, succeeds William D. Watkins as chief executive officer.

“Seagate is a strong company and we are making measurable progress toward regaining our longstanding product leadership position across all markets. I look forward to working closely with Seagate’s talented employees around the world to build upon our success and accelerate the improvements we are making in our business,” said Mr. Luczo.

According to analysts, the return of Mr. Luczo to the chief executive role is likely to mean numerous changes for the company. At first, he should try to fix obvious weak points of Seagate’s business, particularly lowering mobile hard drive market share.

“Seagate fell short on the 320GB and 500GB models for notebooks and Western Digital really ramped up and took over in that business,” said says Krishna Chander of market research firm iSuppli in an interview with BusinessWeek web-site.

There are other products that Seagate would better promote more actively: external hard disk drives as well as solid state drives (SSDs). External hard drives are hardly a truly mass product, but they are sold with substantial price premium over traditional internal devices. Back in 2008 the total available market of external HDDs was 12 million, but while Western Digital shipped 3.7 million units, Seagate only managed to supply about 600 thousand, according to iSuppli. SSDs are also not a large product category, but it seems that companies like Hitachi, Samsung and Toshiba are better prepared to expand in the growing market of flash-based storage solutions than Seagate.

It is not exactly clear how Mr. Luczo wants to get the hard drive maker back on track of further rapid development. One of the ways could be an acquisition of another player, for instance Fujitsu’s hard drive business, but analysts say that this is not really likely to happen as credits are hard to get, whereas Seagate itself has only $1.15 billion in cash. What is likely is that Stephen Luczo will stay CEO of Seagate while the company is being rebuild and will resign once the reforms are deployed.

“Luczo does not want to do the day-to-day operation He’ll want to reposition the company and then hand it off to someone else,” said Mr. Chander.

Mr. Luczo has held various senior management positions at Seagate over the last 15 years. He currently serves as the company’s chairman of the board, a position he has held since June 2002. He served as CEO of Seagate from July 1998 until July 2004. During this time, Mr. Luczo successfully led the Company’s privatization in 2000 and subsequent public offering in 2002, and Seagate announced some of the most important new products in the company’s history. Mr. Luczo joined Seagate in October 1993 as senior vice president of corporate development and later served as president and chief operating officer from September 1997 until being appointed CEO.