Seagate results exceed expectations

Peter Dinham
Friday, 06 January 2012 23:26

IT Industry - Market

Seagate shipped around 47 million disk drives in the second quarter of the current financial year, also posting better than expected results for the December quarter with preliminary revenues of between $3.1 and $3.2 billion.

 

The acquisition by Seagate of Samsung's hard disk drive business closed on December 19, 2011, and the preliminary financial results just announced for the fiscal second quarter ended December 30, 2011, include Samsung operating activity from that date.

Seagate CEO and chairman, Steve Luczo, said the company shipped approximately 47 million disk drives in the second quarter, including approximately 700,000 Samsung disk drives, and expects to report revenue for its fiscal second quarter 2012 of $3.1 - $3.2 billion.

Luczo said that before giving effect to charges related to the acquisition of Samsung's hard disk drive business that are not yet determinable, the company expects gross margin as a percent of revenue to be at least 30.5 percent, operating expenses (product development, marketing and administrative) to be approximately $390 million, and diluted outstanding shares to be 440 million.

'The better than expected results for the December quarter are attributed to the company's outstanding operational performance and overall strong execution,' Luczo said.

'Due to our best-in-class operations, diversified supply-chain and differentiated manufacturing footprint, we continuously optimised our builds for customers during the quarter. This is best evidenced by our company's ability to increase the average capacity per drive shipped quarter-over-quarter to a record 653 gigabytes, despite the significant supply chain disruption. These results also reflect the hard work and resiliency of the Seagate teams and our strategic suppliers who are working to help the industry recover from the massive disruption caused by the flooding in Thailand.'

Seagate reported that cash, cash equivalents, and marketable securities at the end of the December quarter totalled more than $2.1 billion, inclusive of substantial outflows of approximately $1.2 billion during the quarter for matured debt and cash consideration for the Samsung transaction.

For the 2012 calendar year, Luczo said Seagate continues to believe that unit demand will exceed supply and combined with the high growth rate in the demand for raw storage, and that the 'exabyte shortage will be more pronounced than the unit shortage, and as a result pricing is expected to remain stable.'

According to Luczo, Seagate continues to believe that during calendar 2012 unit demand will exceed supply and combined with the high growth rate in the demand for raw storage, the exabyte shortage will be more pronounced than the unit shortage, and as a result pricing is expected to remain stable.

For the March 2012 quarter, Seagate expects unit shipments to increase as compared to the December quarter, with revenue of $4.2-$4.5 billion, gross margin as a percent of revenue of at least 33%, and operating expenses (product development, marketing and administrative) to be approximately $415 million. The March quarter estimates exclude costs related to integration activities, transition support services and acquisition related costs associated with the acquisition of Samsung's hard disk drive operations.