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Seagate (STX) Posts Loss in Q4, Revenues Miss Estimates
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Seagate Technology Holdings plc (STX - Free Report) reported fourth-quarter fiscal 2023 non-GAAP loss of 18 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 23 cents. The company reported non-GAAP earnings of $1.59 in the year-ago quarter.
Management expected non-GAAP earnings per share for the fiscal fourth quarter to be 20 cents per share (+/- 20 cents).
Non-GAAP revenues of $1.602 billion missed the Zacks Consensus Estimate by 3%. The figure declined 39% on a year-over-year basis and fell 14% sequentially. Management projected revenues of $1.7 billion (+/- $150 million) for the fiscal fourth quarter.
Seagate noted that bumpy economic recovery in China, cautious enterprise spending and continued inventory digestion by clients affected top-line performance. The company expects these trends to persist through the first half of fiscal 2024. Seagate remains on track to ramp up volume of HAMR 30+ TB drives in early calendar-year 2024.
Seagate Technology Holdings PLC Price, Consensus and EPS Surprise
The stock is down 0.7% in the pre-market trading on Jul 27. In the past year, STX has lost 26.3% of their value compared with the sub-industry’s decline of 1.3%.
Image Source: Zacks Investment Research
Exabyte Shipments in Detail
In the reported quarter, Seagate shipped 91.2 exabytes of HDD storage. This marked a decline of 41% on a year-over-year basis and 23% sequentially.
Average mass capacity decreased 18% year over year and 22% sequentially to 6.4 TB.
The company shipped 75.2 exabytes for the mass-capacity storage market (including nearline, video and image applications and network-attached storage). This recorded a year-over-year and sequential plunge of 46% and 28%, respectively, in exabytes shipments. Average mass capacity per drive fell sequentially to 9.6 TB from 13 TB.
In the nearline market, it shipped 54.7 exabytes of HDD, down 54% year over year and 37% sequentially.
Seagate shipped 16 exabytes for the legacy market (which includes mission-critical notebooks, desktops, gaming consoles, digital video recorders or DVR and external consumer devices), down 1% year over year in exabyte shipments but up 9% sequentially. Average capacity improved sequentially by 10% to 2.5 TB.
Revenues by Product Group
Total revenues for HDD (86.5% of revenues) tumbled 43% year over year to $1.385 billion in the reported quarter. On a sequential basis, revenues were down 14%.
Non-HDD segment’s revenues (13.5% of revenues) including enterprise data solutions, cloud systems and solid-state drives were $218 million, unchanged on a year over year basis. However, this figure decreased 15% sequentially owing to lower enterprise systems volume.
Our estimates for revenues from HDD and non-HDD segments were $1.448 million and $234.8 million, respectively.
Margin Details
Non-GAAP gross margin fell to 19.5% compared with the prior-year quarter’s 29.3%.
Non-GAAP operating expenses were down 26% on a year-over-year basis to $258 million mostly due to cost cutting efforts and lower variable compensation.
Non-GAAP income from operations totaled $55 million, down from $422 million reported in the year-ago quarter. Non-GAAP operating margin fell to 3.4% compared with the prior-year quarter’s 16.1%.
Balance Sheet and Cash Flow
As of Jun 30, 2023, cash and cash equivalents were $786 million compared with $766 million as of Apr 1, 2023.
As of Jun 30, 2023, long-term debt (including the current portion) was $5.451 billion compared with $5.958 billion as of Apr 1, 2023.
Cash flow from operations was $218 million compared with $228 million reported in the previous quarter. Free cash flow amounted to $168 million compared with $174 million in the previous quarter.
The company paid $145 million as dividends in the fiscal fourth quarter. It 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 Oct 10 to shareholders of record as of the close of business on Sep 26.
Outlook
Management anticipates first-quarter fiscal 2024 revenues to be $1.55 billion (+/- $150 million).
Non-GAAP loss for the fiscal first quarter is expected to be 16 cents per share (+/- 20 cents).
Zacks Rank
Currently, Seagate carries a Zacks Rank #5 (Strong Sell).
The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings has increased 0.8% in the past 60 days to $3.61 per share. WWD’s long-term earnings growth rate is anticipated to be 13.5%. Shares of WWD have risen 17.4% in the past year.
The consensus mark for Salesforce’s fiscal 2024 earnings is pegged at $7.44 per share, up 4.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.3%.
CRM’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 15.5%. Shares of CRM have increased 25.2% in the past year.
The consensus estimate for Adobe’s fiscal 2023 earnings is pegged at $15.70 per share, up 1.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 13.3%.
Adobe’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 3.1%. Shares of ADBE have improved 33.7% in the past year.
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Seagate (STX) Posts Loss in Q4, Revenues Miss Estimates
Seagate Technology Holdings plc (STX - Free Report) reported fourth-quarter fiscal 2023 non-GAAP loss of 18 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 23 cents. The company reported non-GAAP earnings of $1.59 in the year-ago quarter.
Management expected non-GAAP earnings per share for the fiscal fourth quarter to be 20 cents per share (+/- 20 cents).
Non-GAAP revenues of $1.602 billion missed the Zacks Consensus Estimate by 3%. The figure declined 39% on a year-over-year basis and fell 14% sequentially. Management projected revenues of $1.7 billion (+/- $150 million) for the fiscal fourth quarter.
Seagate noted that bumpy economic recovery in China, cautious enterprise spending and continued inventory digestion by clients affected top-line performance. The company expects these trends to persist through the first half of fiscal 2024. Seagate remains on track to ramp up volume of HAMR 30+ TB drives in early calendar-year 2024.
Seagate Technology Holdings PLC Price, Consensus and EPS Surprise
Seagate Technology Holdings PLC price-consensus-eps-surprise-chart | Seagate Technology Holdings PLC Quote
The stock is down 0.7% in the pre-market trading on Jul 27. In the past year, STX has lost 26.3% of their value compared with the sub-industry’s decline of 1.3%.
Image Source: Zacks Investment Research
Exabyte Shipments in Detail
In the reported quarter, Seagate shipped 91.2 exabytes of HDD storage. This marked a decline of 41% on a year-over-year basis and 23% sequentially.
Average mass capacity decreased 18% year over year and 22% sequentially to 6.4 TB.
The company shipped 75.2 exabytes for the mass-capacity storage market (including nearline, video and image applications and network-attached storage). This recorded a year-over-year and sequential plunge of 46% and 28%, respectively, in exabytes shipments. Average mass capacity per drive fell sequentially to 9.6 TB from 13 TB.
In the nearline market, it shipped 54.7 exabytes of HDD, down 54% year over year and 37% sequentially.
Seagate shipped 16 exabytes for the legacy market (which includes mission-critical notebooks, desktops, gaming consoles, digital video recorders or DVR and external consumer devices), down 1% year over year in exabyte shipments but up 9% sequentially. Average capacity improved sequentially by 10% to 2.5 TB.
Revenues by Product Group
Total revenues for HDD (86.5% of revenues) tumbled 43% year over year to $1.385 billion in the reported quarter. On a sequential basis, revenues were down 14%.
Non-HDD segment’s revenues (13.5% of revenues) including enterprise data solutions, cloud systems and solid-state drives were $218 million, unchanged on a year over year basis. However, this figure decreased 15% sequentially owing to lower enterprise systems volume.
Our estimates for revenues from HDD and non-HDD segments were $1.448 million and $234.8 million, respectively.
Margin Details
Non-GAAP gross margin fell to 19.5% compared with the prior-year quarter’s 29.3%.
Non-GAAP operating expenses were down 26% on a year-over-year basis to $258 million mostly due to cost cutting efforts and lower variable compensation.
Non-GAAP income from operations totaled $55 million, down from $422 million reported in the year-ago quarter. Non-GAAP operating margin fell to 3.4% compared with the prior-year quarter’s 16.1%.
Balance Sheet and Cash Flow
As of Jun 30, 2023, cash and cash equivalents were $786 million compared with $766 million as of Apr 1, 2023.
As of Jun 30, 2023, long-term debt (including the current portion) was $5.451 billion compared with $5.958 billion as of Apr 1, 2023.
Cash flow from operations was $218 million compared with $228 million reported in the previous quarter. Free cash flow amounted to $168 million compared with $174 million in the previous quarter.
The company paid $145 million as dividends in the fiscal fourth quarter. It 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 Oct 10 to shareholders of record as of the close of business on Sep 26.
Outlook
Management anticipates first-quarter fiscal 2024 revenues to be $1.55 billion (+/- $150 million).
Non-GAAP loss for the fiscal first quarter is expected to be 16 cents per share (+/- 20 cents).
Zacks Rank
Currently, Seagate carries a Zacks Rank #5 (Strong Sell).
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Woodward (WWD - Free Report) , Salesforce (CRM - Free Report) and Adobe (ADBE - Free Report) . Salesforce sports a Zacks Rank #1 (Strong Buy) while each of Adobe and Woodward carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings has increased 0.8% in the past 60 days to $3.61 per share. WWD’s long-term earnings growth rate is anticipated to be 13.5%. Shares of WWD have risen 17.4% in the past year.
The consensus mark for Salesforce’s fiscal 2024 earnings is pegged at $7.44 per share, up 4.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.3%.
CRM’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 15.5%. Shares of CRM have increased 25.2% in the past year.
The consensus estimate for Adobe’s fiscal 2023 earnings is pegged at $15.70 per share, up 1.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 13.3%.
Adobe’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 3.1%. Shares of ADBE have improved 33.7% in the past year.