Seagate (STX)

[winston]

vested

April 26, 2017

Seagate Drops 15%: Q4 View Weak in Part Because of Industry Component Shortages

By Tiernan Ray

Shares of hard disk drive maker Seagate Technology (STX) are down $7.50, or almost 15%, at $43.01, after the company this morning reported fiscal Q3 revenue that missed analysts’ expectations, and forecast this quarter’s revenue lower as well, citing in part a shortage of components that may restrain some computing equipment that happens to use Seagate drives.

Shares of competitor Western digital are down $2.69, or 3%, at $84.19.

CEO Steve Luczo said in prepared remarks that the results “reflect a stable demand environment, good operational execution and momentum in the stabilization of our business model.”

During the conference call following the report, Luczo said “We remain cautiously optimistic about the current macroeconomic environment and IT spending trends.”

He noted that the company’s projected gross profit margin for the quarter is higher than previously forecast, at 31%.

With regard to the outlook, Luczo remarked that it in part reflects some broad shortage of parts in the computing industry:

Our expectations reflect the seasonal decline in revenue, our desire to maintain lower inventories going into the summer months and some conservatism due to the potential impact of component shortages in DRAM and NAND on various aspects of our customers’ businesses in the server, CSP and client space.

Questions from the sell-side analysts on the call showed little concern for the below-consensus revenue outlook; instead, the questions tended to focus on individual segments of the business, pricing trends, and the ongoing question of NAND flash versus disk.

For Q3, Seagate reported revenue in the three months ended in March rose 3%, year over year, to $2.67 billion, yielding EPS of $1.10.

Analysts had been modeling $2.71 billion and $1.07.

For this quarter, the company forecast $2.5 billion to $2.6 billion, versus consensus for $2.68 billion. The company sees EPS of $4.50, in line with consensus.

Source: Barron's

http://blogs.barrons.com/techtraderdail ... yptr=yahoo

[winston]

not vested

Seagate Technology PLC (STX) Dividend Yield Pushes Past 5%

Seagate continues to provide steady payouts and yield to investors

Source: Dividend Channel

http://investorplace.com/2017/04/stx-di ... QUvt9J96M8

[winston]

not vested

Tech Stocks to Buy: Seagate (STX)
Forward P/E Ratio: 9
YTD Performance: 15%

Conservative guidance from hard-disk maker Seagate Technology plc (NASDAQ:STX) ended the uptrend in the stock.

While the company beat third-quarter estimates, it considered seasoal declines and component shortages when it issued its forward guidance.

Seagate earned $1.10 a share on revenue of $2.67 billion. Gross margin of 30.5% from Q1 will follow with 31% in the current quarter. The company forecast earnings of $4.50 for the 2017 year.

The company’s Cloud Systems and Silicon Group reported growth of 19% Y/Y. It benefited especially from sales of Flash-based solutions. When asked how it would grow the company, CEO Luczo said:

“We continue to work the financial model so the Systems business is profitable to the overall business and then gives us the option to grow into some of these markets if we see either OEMs or CSPs decide that they want to see solutions at the systems level versus the device level. And we still believe that’s the opportunity in front of us.”

Demand for storage is strong. Cloud computing keeps growing and data centers will sustain demand for hard disk drives.

Seagate’s plunge after the earnings report is overdone. The stock’s forward P/E is just 9.47 times and its dividend yields 5.9%. Profits from data storage solutions are not going away.

NAS, DDR and consumer surveillance all need large-capacity hard drives. The steady business makes Seagate suitable for both value investors and income investors.

Source: Investor Place

[winston]

not vested

Quarterly Results

We heard from Seagate today, one of the data storage kings.

Revenue was up 44% year-over-year to $3.1 billion.

Record gross margins. Almost a billion dollars of free cash flow in a single quarter — the highest level Seagate has reported in over a decade.

But here was the bigger takeaway: Seagate told us that the top three global cloud providers have nearly doubled their remaining performance obligations to $1.1 trillion.

That's the future revenue that enterprises and developers have already contractually committed to those cloud providers, primarily for AI infrastructure. And it's that number that's taking down Seagate's storage capacity all the way through calendar 2027.

They are sold out.

Seagate's CEO described what is happening as the "inference inflection." He said compute infrastructure is shifting from periodic training to becoming engines that continuously generate mass capacity data.

Agentic AI is the new demand driver (continuously ingesting inputs, generating reasoning, and storing output). Physical AI will take it to yet another level. AI robots create massive amounts of data that needs to be stored, retained, and reused, making storage demand continuous.

Source: Forbes

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Seagate, Western Digital Crater After Toshiba Breaks Hard-Drive "Supply Discipline" Pact
https://www.zerohedge.com/markets/seaga ... pline-pact