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Seagate Earnings Beat Expectations. Why Its Inventory Is Falling.

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Seagate purchased again 2.6 million shares within the June quarter.


Seagate Expertise Holdings shares are promoting off on Wednesday even after the corporate reported monetary outcomes for the fiscal fourth quarter ended June 30 that had been forward of Avenue forecasts. Apparently, traders needed an even bigger beat than the corporate delivered. 

Seagate inventory (ticker: STX) was down 5.6%, at $80.70, in latest buying and selling. The S&P 500 was up 0.6%.

Expectations for the disk-drive maker had ratcheted increased heading into the quarter, pushed by a mixture of upper IT spending, progress in cloud computing, and the adoption of high-capacity disk drives by cryptocurrency miners—and the outcomes presumably didn’t meet the whisper numbers.

For the quarter, Seagate posted income of $3 billion, up 20% from the year-ago interval and forward of the Avenue consensus at $2.95 billion. Non-GAAP earnings had been $2 a share, topping the Avenue consensus at $1.84. Beneath usually accepted accounting rules, the corporate earned $2.07 a share, up from 64 cents. 

Income topped the $3 billion stage for the primary time in six years—and non-GAAP earnings had been the best in 9 years. Non-GAAP gross margin expanded to 29.6%, from 27.3% a 12 months in the past, whereas non-GAAP working margin jumped to 18.1%, from 14.8% a 12 months in the past.

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“Demand for knowledge is quickly accelerating within the cloud and on the edge, driving secular progress for mass capability knowledge storage,” Seagate CEO Dave Mosley mentioned in a press release. “Seagate’s industry-leading product portfolio for mass knowledge infrastructure locations the corporate in an excellent place to capitalize on sturdy demand developments, generate stable and rising free money movement and obtain our long-term monetary aims.”

For the September quarter, Seagate is projecting income of $3.1 billion, give or take $150 million, with non-GAAP earnings of $2.20 a share, give or take 15 cents; earlier Avenue consensus was $2.94 billion and $1.85 a share. The corporate mentioned on a convention name with analysts Wednesday morning that it expects fiscal 2022 income progress within the excessive single digits or higher.

Seagate purchased again 2.6 million shares within the June quarter, rising the whole quantity bought for the complete 12 months to 33.6 million and lowering share rely by about 13%.

Write to Eric J. Savitz at eric.savitz@barrons.com

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