Seagate’s Earnings Miss Estimates as Demand for Disk Drives Worsens

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The disk-drive company

Seagate

Technology posted sales and profits that were well short of expectations, offering guidance for the current quarter that likewise failed to meet Wall Street estimates. 

The company is reducing its planned production in response to softer demand, in particular from consumer-facing “legacy” end markets, like personal computers.

For its fiscal fourth quarter, ended July 1, Seagate (ticker: STX) posted revenue of $2.6 billion, down 13% from a year ago, and below the company’s forecast of $2.8 billion. Non-GAAP profits were $1.59 a share, well below the company’s projection of $1.90 a share.

Under generally accepted accounting principles, the company earned $1.27 a share. The Street consensus estimates were for $2.78 billion in revenue and profits of $1.88 a share.

Likewise, Seagate sees September quarter revenue of $2.5 billion, give or take $150 million, with adjusted profits of $1.40 a share. That is a huge miss: Street estimates called for $3.03 billion in revenue and profits of $2.27 a share.

For the fiscal year, Seagate posted revenue of $11.7 billion, with profits of $8.18 a share, up from $10.7 billion and $5.64 a share a year earlier.

In a statement, Seagate CEO Dave Mosely  said the company saw “stable mass capacity storage demand,” in particular for cloud applications, offset by the impact of Covid-19 restrictions in Asia and the effects of a weaker global economy on other markets, in particular those serving consumers.

“The confluence of macro-related challenges is continuing into the September quarter,” Moseley said. “In this environment, we are reducing our production plans to maintain supply discipline as our customers manage through macro uncertainty and on-going non-HDD component shortages, and we are diligently managing expenses to protect profitability.”

Trading in Seagate shares was halted before the company issued the earnings announcement. Shares of rival

Western Digital

(WDC) are down 6.6%, to $47.11.

Write to Eric J. Savitz at [email protected]