Seagate Technology's(STX Quote) $1.9 billion acquisition of rival hard-drive maker Maxtor(MXO Quote) removes a competitor whose penchant for price-cutting hurts margins and will allow the buffed-up company to enjoy considerable economies of scale.
What the deal announced early Wednesday doesn't do is give Seagate access to cutting-edge technology; in fact, Maxtor has missed the boat on two of the industries' hottest markets -- small drives for notebook computers and even smaller drives for use in digital gadgets such as Apple's (AAPL Quote) iPod.
Still, the cost synergies are notable. In the first year of the merger, Seagate expects to cut $300 million from Maxtor's capital expenditures budget of about $450 million. Other savings, including personnel cuts, have not yet been released, but analysts say they will be substantial. ...
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