Seagate’s revenue fall in fiscal 3Q16
On April 29, 2016, Seagate Technology (STX) reported its fiscal 3Q16 results. In fiscal 3Q16, which ended March 31, 2016, Seagate reported revenues of $2.6 billion and a gross margin of 20.2%. Net loss for 3Q16 was $21 million, with diluted EPS (earnings per share) of -$0.07. On a non-GAAP (generally accepted accounting principles) basis, Seagate reported a gross margin of 22.7%, net income of $66 million, and diluted EPS of $0.22.
Earlier in April, Seagate announced its preliminary earnings results and lowered its revenue and margin estimates for fiscal 3Q16. The company cited weaker-than-expected demand and inventory declines in enterprise disk drives as the primary reasons for this guidance. Seagate expected its revenue to be $2.6 billion, as compared to its earlier guidance of $2.7 billion.
Short-term factors impacting revenues
Steve Luczo, Seagate’s Chair and Chief Executive Officer, stated that the company’s “quarterly results fell short of our expectations as a result of several near-term demand factors.” Luczo added that “despite these challenges, we believe we have the product portfolio, technology roadmap and operational leverage to ensure we are well-positioned for long-term success.”
Luczo also stated that the company’s management is “aggressively working to position Seagate to respond to new demand levels and are committed to ongoing financial discipline.”
Shares of Seagate fell by over 30% after the earnings announcement. By comparison, shares of peer companies NetApp (NTAP), SanDisk (SNDK), and Western Digital (WDC) have fallen by 4.3%, 1.3%, and 11.3%, respectively, since the announcement. These companies account for 1.2% of the Technology Select Sector SPDR ETF (XLK).
Continue to the next part for a closer look at Seagate’s HDD shipments in fiscal 3Q16.