Seagate Rallies as Sales Top Estimates in Tough Environmentby
Seagate Technology Plc, one of the two biggest makers of hard disk drives, rose the most in 3 1/2 years after reporting sales that beat some analysts’ predictions amid a tough market for computer components.
The Cupertino, California-based company reported sales of $2.99 billion for the fiscal second quarter ended Jan. 1. That compared with an average analyst estimate of $2.94 billion according to data compiled by Bloomberg.
Seagate is dealing with a multiple-year decline in shipments of personal computers and a shift in storage technology away from the spinning magnetic disk-based devices it sells. It’s combating the changes by trying to lower its reliance on PCs and find new markets for storage such as video surveillance.
Seagate shares rallied 8.6 percent to $29.05 at the close in New York, the biggest single-day gain since July 2012.
“In the last several quarters, we have discussed our concerns over global economic conditions, particularly in Europe and China, which have proven accurate, and we believe will persist at least through June this calendar year,” Chief Executive Officer Stephen Luczo said on a conference call with analysts.
In the current period the company is projecting sales of $2.7 billion, a target it says is at the high end of the typical range for this time of year.
Earlier this month, market researchers said worldwide PC shipments dropped in 2015, ending the year at fewer than 300 million units for the first time since 2008. PC makers sold 75.7 million machines in the fourth quarter, a decline of 8.3 percent from a year earlier, according to Gartner Inc., failing to get a boost from holiday sales as more consumers opt to purchase smartphones and tablets.