We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Seagate (STX) Swings to Loss in Q3, Revenues Decline Y/Y
Read MoreHide Full Article
Seagate Technology Holdings plc (STX - Free Report) reported third-quarter fiscal 2023 non-GAAP loss of 28 cents per share against the Zacks Consensus Estimate of earnings of 19 cents per share. The company reported non-GAAP earnings of $1.81 per share in the year-ago quarter.
Management expected non-GAAP earnings per share for the fiscal third quarter to be 25 cents per share (+/- 20 cents).
Non-GAAP revenues of $1.86 billion missed the Zacks Consensus Estimate by 5.8%. The figure declined 34% on a year-over-year basis and fell 1% sequentially. Management had projected revenues of $2 billion (+/- $150 million) for the fiscal third quarter.
Seagate Technology Holdings PLC Price, Consensus and EPS Surprise
The company’s nearline demand among large customers was affected due to elongated customer inventory correction.
Recently, the company announced that it has settled with the U.S. Department of Commerce's Bureau of Industry and Security over allegations that it did not comply with U.S. Export Administration Regulations. The settlement was related to the sale of hard disk drives (HDDs) to Huawei between Aug 17, 2020 and Sep 29, 2021.
Accordingly, the company will pay $300 million to the U.S. Department of Commerce in installments of $15 million per quarter over five years. The first payment is due in October 2023.
In the past year, shares of the company have lost 25.3% of their value compared with the sub-industry’s decline of 25.6%.
Image Source: Zacks Investment Research
Exabyte Shipments in Detail
In the reported quarter, Seagate shipped 118.7 exabytes of HDD storage. This marked a year-over-year decline of 23% but a rise of 5% sequentially.
Average mass capacity increased 22% year over year to 8.2 TB and rose 12% sequentially.
The company shipped 104.1 exabytes for the mass-capacity storage market (including nearline, video and image applications and network-attached storage). This marked a sequential increase of 8% but a year-over-year decline of 22% in exabytes shipments. Average mass capacity per drive improved sequentially to 13 TB from 11.9 TB.
In the nearline market, the company shipped 86.8 exabytes of HDD, down 26% year over year but rose 9% sequentially.
The company shipped 14.6 exabytes for the legacy market (which includes mission-critical notebooks, desktops, gaming consoles, digital video recorders or DVR and external consumer devices), down 32% year over year in exabyte shipments. Average capacity improved sequentially by 2% to 2.2 TB.
Revenues by Product Group
Total revenues for HDD (86.2% of revenues) declined 37% year over year to $1.604 billion in the reported quarter. On a sequential basis, revenues were down 4%.
Non-HDD segment’s revenues (13.8% of revenues), including enterprise data solutions, cloud systems and solid-state drives, were $256 million. This figure improved 8% on a year-over-year basis and 14% sequentially.
Margin Details
Non-GAAP gross margin fell to 18.7% compared with the prior-year quarter’s reported figure of 29.2%.
Non-GAAP operating expenses were down 18% on a year-over-year basis to $282 million.
Non-GAAP income from operations totaled $65 million, down from $472 million reported in the year-ago quarter. Non-GAAP operating margin fell to 3.5% compared with the prior-year quarter’s reported figure of 16.8%.
Balance Sheet and Cash Flow
As of Apr 1, 2023, cash and cash equivalents were $766 million compared with $770 million as of Dec 30, 2022.
As of Apr 1, 2023, long-term debt (including the current portion) was $5.958 billion compared with $6.029 billion as of Dec 30, 2022.
Cash flow from operations was $228 million in the third quarter compared with $251 million reported in the previous quarter. The free cash flow in the reported quarter amounted to $174 million compared with $172 million in the previous quarter.
The company paid $145 million as dividends in the fiscal third quarter. The company exited the quarter with 207 million shares outstanding.
Seagate announced a quarterly cash dividend of 70 cents per share. The dividend will be paid out on Jul 5 to shareholders of record as of the close of business on Jun 21.
Outlook
Management anticipates fourth-quarter fiscal 2023 revenues to be $1.7 billion (+/- $150 million). The Zacks Consensus Estimate for revenues is pegged at $2.1 billion.
Non-GAAP loss for the fiscal fourth quarter is expected to be 20 cents per share (+/- 20 cents).
On Apr 20, 2023, the company announced a restructuring plan to reduce its costs in response to changes in macroeconomic and business conditions. The plan aims to align the company's operations with the current demand while supporting its long-term business strategy.
The plan is expected to cost approximately $150 million in pre-tax charges, mainly for employee severance and other one-time termination benefits. The company expects to complete the plan by the fourth quarter of fiscal 2023-end and to realize an annualized run-rate savings of around $200 million starting from the fiscal first quarter of 2024.
Zacks Rank & Stocks to Consider
Currently, Seagate carries a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for Arista Networks’ 2023 earnings has increased 1.2% in the past 60 days to $5.83 per share. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.2%. Shares of ANET have increased 26.9% in the past year.
The Zacks Consensus Estimate for Asure Software’s 2023 earnings has increased 25% in the past 60 days to 35 cents per share. The long-term earnings growth rate is anticipated to be 25%.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 445.8%. Shares of ASUR have increased 187.8% in the past year.
The Zacks Consensus Estimate for Salesforce’s 2023 earnings has increased 21.5% in the past 60 days to $7.11 per share. The long-term earnings growth rate is anticipated to be 16.8%.
Salesforce’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 15.6%. Shares of the company have increased 3% in the past year.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Seagate (STX) Swings to Loss in Q3, Revenues Decline Y/Y
Seagate Technology Holdings plc (STX - Free Report) reported third-quarter fiscal 2023 non-GAAP loss of 28 cents per share against the Zacks Consensus Estimate of earnings of 19 cents per share. The company reported non-GAAP earnings of $1.81 per share in the year-ago quarter.
Management expected non-GAAP earnings per share for the fiscal third quarter to be 25 cents per share (+/- 20 cents).
Non-GAAP revenues of $1.86 billion missed the Zacks Consensus Estimate by 5.8%. The figure declined 34% on a year-over-year basis and fell 1% sequentially. Management had projected revenues of $2 billion (+/- $150 million) for the fiscal third quarter.
Seagate Technology Holdings PLC Price, Consensus and EPS Surprise
Seagate Technology Holdings PLC price-consensus-eps-surprise-chart | Seagate Technology Holdings PLC Quote
The company’s nearline demand among large customers was affected due to elongated customer inventory correction.
Recently, the company announced that it has settled with the U.S. Department of Commerce's Bureau of Industry and Security over allegations that it did not comply with U.S. Export Administration Regulations. The settlement was related to the sale of hard disk drives (HDDs) to Huawei between Aug 17, 2020 and Sep 29, 2021.
Accordingly, the company will pay $300 million to the U.S. Department of Commerce in installments of $15 million per quarter over five years. The first payment is due in October 2023.
In the past year, shares of the company have lost 25.3% of their value compared with the sub-industry’s decline of 25.6%.
Image Source: Zacks Investment Research
Exabyte Shipments in Detail
In the reported quarter, Seagate shipped 118.7 exabytes of HDD storage. This marked a year-over-year decline of 23% but a rise of 5% sequentially.
Average mass capacity increased 22% year over year to 8.2 TB and rose 12% sequentially.
The company shipped 104.1 exabytes for the mass-capacity storage market (including nearline, video and image applications and network-attached storage). This marked a sequential increase of 8% but a year-over-year decline of 22% in exabytes shipments. Average mass capacity per drive improved sequentially to 13 TB from 11.9 TB.
In the nearline market, the company shipped 86.8 exabytes of HDD, down 26% year over year but rose 9% sequentially.
The company shipped 14.6 exabytes for the legacy market (which includes mission-critical notebooks, desktops, gaming consoles, digital video recorders or DVR and external consumer devices), down 32% year over year in exabyte shipments. Average capacity improved sequentially by 2% to 2.2 TB.
Revenues by Product Group
Total revenues for HDD (86.2% of revenues) declined 37% year over year to $1.604 billion in the reported quarter. On a sequential basis, revenues were down 4%.
Non-HDD segment’s revenues (13.8% of revenues), including enterprise data solutions, cloud systems and solid-state drives, were $256 million. This figure improved 8% on a year-over-year basis and 14% sequentially.
Margin Details
Non-GAAP gross margin fell to 18.7% compared with the prior-year quarter’s reported figure of 29.2%.
Non-GAAP operating expenses were down 18% on a year-over-year basis to $282 million.
Non-GAAP income from operations totaled $65 million, down from $472 million reported in the year-ago quarter. Non-GAAP operating margin fell to 3.5% compared with the prior-year quarter’s reported figure of 16.8%.
Balance Sheet and Cash Flow
As of Apr 1, 2023, cash and cash equivalents were $766 million compared with $770 million as of Dec 30, 2022.
As of Apr 1, 2023, long-term debt (including the current portion) was $5.958 billion compared with $6.029 billion as of Dec 30, 2022.
Cash flow from operations was $228 million in the third quarter compared with $251 million reported in the previous quarter. The free cash flow in the reported quarter amounted to $174 million compared with $172 million in the previous quarter.
The company paid $145 million as dividends in the fiscal third quarter. The company exited the quarter with 207 million shares outstanding.
Seagate announced a quarterly cash dividend of 70 cents per share. The dividend will be paid out on Jul 5 to shareholders of record as of the close of business on Jun 21.
Outlook
Management anticipates fourth-quarter fiscal 2023 revenues to be $1.7 billion (+/- $150 million). The Zacks Consensus Estimate for revenues is pegged at $2.1 billion.
Non-GAAP loss for the fiscal fourth quarter is expected to be 20 cents per share (+/- 20 cents).
On Apr 20, 2023, the company announced a restructuring plan to reduce its costs in response to changes in macroeconomic and business conditions. The plan aims to align the company's operations with the current demand while supporting its long-term business strategy.
The plan is expected to cost approximately $150 million in pre-tax charges, mainly for employee severance and other one-time termination benefits. The company expects to complete the plan by the fourth quarter of fiscal 2023-end and to realize an annualized run-rate savings of around $200 million starting from the fiscal first quarter of 2024.
Zacks Rank & Stocks to Consider
Currently, Seagate carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology space are Arista Networks (ANET - Free Report) , Asure Software (ASUR - Free Report) and Salesforce (CRM - Free Report) . Asure Software and Salesforce currently sport a Zacks Rank #1 (Strong Buy), whereas Arista Networks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2023 earnings has increased 1.2% in the past 60 days to $5.83 per share. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.2%. Shares of ANET have increased 26.9% in the past year.
The Zacks Consensus Estimate for Asure Software’s 2023 earnings has increased 25% in the past 60 days to 35 cents per share. The long-term earnings growth rate is anticipated to be 25%.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 445.8%. Shares of ASUR have increased 187.8% in the past year.
The Zacks Consensus Estimate for Salesforce’s 2023 earnings has increased 21.5% in the past 60 days to $7.11 per share. The long-term earnings growth rate is anticipated to be 16.8%.
Salesforce’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 15.6%. Shares of the company have increased 3% in the past year.