Seagate Misses EPS, Revs Up Y/Y - Analyst Blog
01 Agosto 2012 - 11:00AM
Zacks
Seagate Technology
plc (STX) reported fourth quarter 2012 earnings per share
of $2.41, missing the Zacks Consensus Estimate of $2.51.
Revenue
Seagate reported revenues of $4.48
billion in the fourth quarter of 2012, up 56.8% from $2.86 billion
in the year-ago period. The company registered record shipments of
66 million units reflecting a market share of around 42%.
Based on the extraordinary efforts
of its supply chain units and outstanding execution, the company
extended its product portfolio to a large customer base.
Operating
Results
Gross profit was $1.48 billion
compared with $551.0 million in the prior-year quarter. Gross
margin was 33.1% compared with 19.3% in the prior-year quarter. The
company was able to control its costs during the quarter, which
increased at a much lower rate compared to revenue increase.
Operating income in the quarter
skyrocketed 456.3% year over year to $1.06 billion and was 23.6% of
revenues from 190.0 million or 6.7% of revenues in the year-ago
quarter. This remarkable improvement was on the back lower product
development and restructuring costs. This in turn led to lower
operating expense, which increased at a lower pace versus revenue
increase.
On a GAAP basis, net income was
$1.01 billion or $2.37 per share, compared with $119.0 million or
27 cents per share in the comparable quarter last year. Excluding
the impact of one-time items, adjusted net income was $1.03 billion
or $2.41 per share.
Balance Sheet, Cash
Flow
Cash and cash equivalents totaled
approximately $1.71 billion at the end of the quarter versus $1.64
billion in the previous quarter. Accounts receivables decreased to
$2.32 billion from $2.48 billion in the prior quarter. Seagate’s
long-term debt declined by $89.0 million to $2.86 billion. The
company possesses strong cash generation ability and generated
$3.26 billion from operating activities.
Our Take
Seagate reported a modest fourth
quarter result, with revenue improving substantially but EPS
missing our expectation. We believe that Seagate’s weakness is
short term. Full recovery in the HDD industry and increasing demand
will position Seagate as the leading player in the market. Seagate
has a significant exposure to high-end corporate desktop and
enterprise server markets compared to its rival Western
Digital Corp. (WDC).
Nevertheless, lackluster PC demand
and increasing use of SSDs will continue to hamper the demand for
HDDs. But Seagate’s growing exposure in the Enterprise SSD market
will help it generate healthy revenues in fiscal 2012 and beyond,
which in turn will improve margins.
Currently, Seagate has a Zacks #3
Rank, implying a short-term Hold rating.
SEAGATE TECH (STX): Free Stock Analysis Report
WESTERN DIGITAL (WDC): Free Stock Analysis Report
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