Seagate Shares Jump After Disk-Drive Maker’s Quarterly Sales Top Estimates
Stock Chart for Seagate Technology PLC (STX)
Seagate Technology Plc (STX), the world’s largest maker of computer disk drives, rose as much as 7.9 percent in late trading yesterday after reporting preliminary revenue figures that topped analysts’ estimates.
Sales were $3.1 billion to $3.2 billion in the fiscal second quarter, which ended Dec. 30, the company said in a statement. Seagate shipped about 47 million drives, lifted by its acquisition of Samsung Electronics Co.’s hard-disk unit -- a deal completed (STX) Dec. 19. Analysts had projected revenue of $2.79 billion on average, according to data compiled by Bloomberg (STX).
Seagate overcame supply-chain (STX) disruptions and increased the amount of storage on each drive to an average of 653 gigabytes in the quarter. The industry suffered a devastating flood last year in Thailand, which serves as a center of disk-drive manufacturing. Unlike factories owned by competitors, Seagate’s plants weren’t hit by floodwaters, helping it recover quickly.
The results “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,” Steve Luczo, chief executive officer of the Cupertino, California- based company, said in the statement.
Seagate climbed as high as $18.15 in extended trading after the report was released. The shares, which advanced 9.1 percent in 2011, had closed at $16.82 earlier in the day.
In the March quarter, Seagate expects revenue of $4.2 billion to $4.5 billion. Analysts had predicted $3.6 billion on average. Gross margin, the percentage of revenue remaining after production costs, will be at least 33 percent. That’s up from about 30.5 percent in the period ended Dec. 30.
The floodwaters engulfed much of the industrial heartland north of Bangkok, sidelining production of disk drives and components. Western Digital Corp., Seagate’s biggest rival, had to close down production, though it too recovered more quickly than investors had anticipated.
Western Digital shares (WDC) jumped on Dec. 2 after the Irvine, California-based company resumed production and raised its quarterly revenue. The gain helped Western Digital pare its 2011 stock decline to 8.7 percent.
Seagate plans to issue its final second-quarter results on Jan. 31.
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