by Anton Shilov
04/18/2011 | 02:35 PM
Samsung Electronics, the world's largest maker of dynamic random access memory and a major maker of NAND flash memory, reportedly plans to sell its hard disk drive (HDD) business in a bid to get rid of financial losses and concentrate on money-making businesses with better prospects.
Samsung reportedly plans to sell its hard drive business unit for $1.5 billion to Seagate Technology, reports the Wall Street Journal citing unofficial sources. Seagate should also be interested in such acquisition as it will be able to grow its market share significantly and better compete against Western Digital, which recently unveiled plans to acquire HDD business unit of Hitachi.
"Samsung is considering selling its HDD business as it is not strategic to succeed; [Samsung] is neither a follower or a leader in the business, and it's making a loss," said the person familiar with the matter. $1.5 billion seems a reasonable price to sell. It could even be sold for under $1 billion as Samsung is trying to get rid of it," the source reportedly said.
Samsung Electronics has seen its earnings decline recently; earlier this month, it gave a weak earnings estimate for the first quarter. Samsung, commanded about 11% share of the global hard disk drive market in the Q4 2010 and has been losing money with the business. A sale of the company's HDD business unit would help generate cash for reinvestment in promising business areas.
Rather than competing with companies like Seagate or WD on the market of traditional hard drives, which is growing slowly, it makes more sense for the company to compete on the market of solid-state drives (SSDs), which is growing rather rapidly.
Samsung and Seagate did not comment on the news-story.