Canaccord Genuity Morning Coffee on Seagate Technology (STX): Below Sea Level Results

August 1, 2012 10:54 AM EDT
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Canaccord Genuity Morning Coffee on Seagate Technology (Nasdaq: STX): Below sea level results.

Shares of hard drive maker Seagate Technology slid after it projected first-quarter revenue below estimates on slowing PC sales and lower-than-expected growth in the company’s enterprise segment. Seagate reported record fiscal fourth-quarter revenue but tempered its sales growth expectations for the calendar year as demand softens and hard-disk drive rivals recover faster than anticipated from severe Asian flooding. Seagate said it expects first-quarter sales of about $4 billion, less than the $4.62 billion expected by analysts. CEO Steve Luczo cited slowing economic growth and shaky sales of personal computers as consumers shift toward tablets and smartphones for the slowing sales growth. Fourth-quarter results also came in below expectations as a supplier issue affected shipments, which the company had warned Wall Street about. The company’s profit rose to $2.37 per share, or $1.01 billion, from $0.28, or $119 million, a year earlier. Revenue jumped 57% to $4.48 billion, lower than average estimates of $2.51 per share on $4.56 billion in revenue. Seagate earlier this month said it would not meet its own revenue guidance for the quarter as it shipped less hard disks to high-margin enterprise customers. Seagate’s results come in contrast to rival Western Digital (NYSE: WDC), which trumped expectations and guided a strong fiscal 2013 on the back of enterprise sales. He added that Seagate expects “relatively flat demand sequentially” in the current quarter but believes the market will improve in the December quarter amid the introduction of Microsoft's (Nasdaq: MSFT) new Windows operating system.

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