Seagate is selling and then leasing back its Longmont, CO, campus for $101.5 million.
The hard disk drive maker opened up in Longmont in 1999 and has a research and development facility there. The campus consists of 40.65 acres of land with a 529,437 sq ft facility at 389 Disc Drive. Mile High says there are 950 employees on site and it features 137,000 square feet of lab space, 10,000 square feet of Class 10 cleanroom, Class A office, a fitness center and a full-service cafeteria. Seagate said it was looking for a sale and leaseback deal last November. At that point, Seagate’s first fiscal 2023 quarter, its revenues had fallen 35 percent Y/Y to $2.04 billion and it wanted to cut its costs and free up capital.
The property was listed for sale in May and has been acquired by private equity business Conscience Bay Co. Greg Belloni, Seagate’s senior manager of corporate communications, told the Longmont Leader that the deal provided “capital for reinvestment into our business, strengthening our balance sheet, and increasing focus on our core competencies to drive growth. We are pleased to confirm the completion of the sale and leaseback transaction.”
Since November Seagate’s quarterly revenues have fallen again, to $1.89 billion in its Q2, with a loss of $33 million, and then to $1.86 billion in Q3, with a loss of $433 million, strengthening the need to obtain cash. It started a layoff round to cut its costs further and set out to raise $1 billion in a private bond placement to pay off debt.
The disk drive market is in a multi-quarter slump and Seagate is introducing its higher density HAMR disk drives after a long and no doubt costly development process. It is also building up its Lyve Drive cloud storage and disk transfer business. Despite its revenue decline it has managed to gain market share in the second calendar 2023 quarter, according to preliminary estimates from research house TrendFocus.
Seagate took around 44.5 percent of the HDD market by revenue, up 1.3 to 1.8 percent Q/Q, with Western Digital accounting for about 38 percent, down around 0.3 percent Q/Q. Third player Toshiba took about 17.5 percent of the market, down between 1.3 and 1.8 percent.
Seagate is leasing the Longmont facility for 10 years with two five-year renewal options, and has received a cash boost of $101.5 million. Hopefully its 33TB HAMR drives will be well received and enable it to continue to gain market share as the HDD recession ends. That is dependent on Pure Storage’s claim of disk drive shipment death by 2029 not coming true, of course.
